Tennessee Business and Law
TENNESSEE BUSINESS AND LAW EXAM | EXAM QUESTIONS
AND CORRECT ANSWERS | LATEST 2026/2027
TENNESSEE BOARD FOR LICENSING CONTRACTORS PREPARATION
SERIES
BUSINESS AND LAW EXAMINATION
Page 1 of 53
, Tennessee Business and Law
Tn Business And Law
1. In Tennessee, a contractor's license is required before bidding or
contracting on a project when the total cost of the project is:
A. $25,000 or more
B. $10,000 or more
C. $50,000 or more
D. $3,000 or more
A. $25,000 or more
Tennessee law requires a contractor's license for prime and qualifying
subcontract work valued at $25,000 or more.
2. Contractor licensing in Tennessee is administered by the:
A. Office of the Secretary of State
B. Department of Labor and Workforce Development
C. Tennessee Department of Revenue
D. Board for Licensing Contractors within the Department of Commerce
and Insurance
D. Board for Licensing Contractors within the Department of
Commerce and Insurance
The Board for Licensing Contractors operates under the Department of
Commerce and Insurance.
3. A Tennessee contractor's license must be renewed every:
A. Five years
B. Three years
C. Year
D. Two years
D. Two years
Tennessee contractor licenses run on a two-year renewal cycle.
Page 2 of 53
, Tennessee Business and Law
4. In counties that require it, a home improvement license applies to
residential remodeling projects valued from:
A. $25,000 and above
B. $1,000 up to $10,000
C. $3,000 up to $25,000
D. $5,000 up to $50,000
C. $3,000 up to $25,000
The home improvement license covers residential remodeling between
$3,000 and $25,000 in participating counties.
5. The monetary limit placed on a Tennessee contractor's license is
based mainly on the:
A. Amount of the contractor's general liability policy
B. Years of field experience of the qualifying agent
C. Working capital and net worth shown on the applicant's financial
statement
D. Number of employees on the payroll
C. Working capital and net worth shown on the applicant's financial
statement
The board sets the limit from the financial statement, using working
capital and net worth.
6. Engaging in contracting in Tennessee without a required license is
classified as a:
A. Civil infraction only
B. Class B felony
C. Class A misdemeanor
D. Class C felony
C. Class A misdemeanor
Unlicensed contracting is punishable as a Class A misdemeanor, in
addition to civil penalties.
Page 3 of 53
, Tennessee Business and Law
7. An unlicensed contractor who sues an owner for payment in
Tennessee is generally limited to recovering:
A. The full contract price
B. Profit and overhead only
C. Only actual documented expenses shown by clear and convincing
evidence
D. The contract price plus statutory interest
C. Only actual documented expenses shown by clear and convincing
evidence
State law limits unlicensed contractors to proven actual expenses, not
profit.
8. A masonry contractor in Tennessee must hold a license when the
masonry portion of a project is valued at:
A. $25,000 or more
B. $100,000 or more
C. $10,000 or more
D. $50,000 or more
B. $100,000 or more
Masonry work carries a higher licensing threshold of $100,000 or more.
9. Electrical, plumbing, and HVAC subcontractors in Tennessee must
hold a contractor's license when their portion of the work totals:
A. $5,000 or more
B. $75,000 or more
C. $25,000 or more
D. $100,000 or more
C. $25,000 or more
These trade subcontractors follow the general $25,000 licensing
threshold.
Page 4 of 53
TENNESSEE BUSINESS AND LAW EXAM | EXAM QUESTIONS
AND CORRECT ANSWERS | LATEST 2026/2027
TENNESSEE BOARD FOR LICENSING CONTRACTORS PREPARATION
SERIES
BUSINESS AND LAW EXAMINATION
Page 1 of 53
, Tennessee Business and Law
Tn Business And Law
1. In Tennessee, a contractor's license is required before bidding or
contracting on a project when the total cost of the project is:
A. $25,000 or more
B. $10,000 or more
C. $50,000 or more
D. $3,000 or more
A. $25,000 or more
Tennessee law requires a contractor's license for prime and qualifying
subcontract work valued at $25,000 or more.
2. Contractor licensing in Tennessee is administered by the:
A. Office of the Secretary of State
B. Department of Labor and Workforce Development
C. Tennessee Department of Revenue
D. Board for Licensing Contractors within the Department of Commerce
and Insurance
D. Board for Licensing Contractors within the Department of
Commerce and Insurance
The Board for Licensing Contractors operates under the Department of
Commerce and Insurance.
3. A Tennessee contractor's license must be renewed every:
A. Five years
B. Three years
C. Year
D. Two years
D. Two years
Tennessee contractor licenses run on a two-year renewal cycle.
Page 2 of 53
, Tennessee Business and Law
4. In counties that require it, a home improvement license applies to
residential remodeling projects valued from:
A. $25,000 and above
B. $1,000 up to $10,000
C. $3,000 up to $25,000
D. $5,000 up to $50,000
C. $3,000 up to $25,000
The home improvement license covers residential remodeling between
$3,000 and $25,000 in participating counties.
5. The monetary limit placed on a Tennessee contractor's license is
based mainly on the:
A. Amount of the contractor's general liability policy
B. Years of field experience of the qualifying agent
C. Working capital and net worth shown on the applicant's financial
statement
D. Number of employees on the payroll
C. Working capital and net worth shown on the applicant's financial
statement
The board sets the limit from the financial statement, using working
capital and net worth.
6. Engaging in contracting in Tennessee without a required license is
classified as a:
A. Civil infraction only
B. Class B felony
C. Class A misdemeanor
D. Class C felony
C. Class A misdemeanor
Unlicensed contracting is punishable as a Class A misdemeanor, in
addition to civil penalties.
Page 3 of 53
, Tennessee Business and Law
7. An unlicensed contractor who sues an owner for payment in
Tennessee is generally limited to recovering:
A. The full contract price
B. Profit and overhead only
C. Only actual documented expenses shown by clear and convincing
evidence
D. The contract price plus statutory interest
C. Only actual documented expenses shown by clear and convincing
evidence
State law limits unlicensed contractors to proven actual expenses, not
profit.
8. A masonry contractor in Tennessee must hold a license when the
masonry portion of a project is valued at:
A. $25,000 or more
B. $100,000 or more
C. $10,000 or more
D. $50,000 or more
B. $100,000 or more
Masonry work carries a higher licensing threshold of $100,000 or more.
9. Electrical, plumbing, and HVAC subcontractors in Tennessee must
hold a contractor's license when their portion of the work totals:
A. $5,000 or more
B. $75,000 or more
C. $25,000 or more
D. $100,000 or more
C. $25,000 or more
These trade subcontractors follow the general $25,000 licensing
threshold.
Page 4 of 53
