CSLB CONTRACTOR'S LAW & BUSINESS EXAM WITH 196
QUESTIONS AND ANSWERS
_____, although usually the largest single item in a bid, can be fairly accurately determined. - -Materials
-"Contractors are required by law to be licensed and regulated by the Contractors' State License Board.
Any questions concerning a contractor may be referred to the Registrar, Contractors' State License
Board, P.O. Box 26000, Sacramento, California, 95826." This statement must be on: - -All prime
contracts.
-A balance sheet shows: - -A balance sheet shows assets and liabilities at a certain point in time.
-A client wants the house painted and carpet installed. What license classification(s) is/are required for
this work? - -Painting and decorating C-33 and floor covering C-15.
-A construction company was hiring a new crew and asked each prospective employee for their name,
address, and Social Security number. Several prospective employees remembered their Social Security
numbers but did not have a card or other documentation. The practice of relying on memorized Social
Security numbers is: - -Unacceptable: The actual Social Security card should have been inspected.
-A consumer may cancel a home solicitation contract at any time prior to midnight of the _____ after
the date of the transaction.
A. 2nd business day
B. 3rd business day
C. 5th business day
D. 7th calendar day - -A consumer may cancel a home solicitation contract at anytime prior to midnight
of the 3rd business day after the date of the transaction.
-A contractor bids on a home improvement project and earns the bid. Later, he decides not to take the
job. Which bond would protect the home owner? - -A bid bond would protect the client from a
contractor who declines to take a job that has already bid.
-A contractor buys a construction firm from a person who is retiring. There is an existing collective
bargaining agreement with a successor clause that is good for three years. As the new owner, is the
contractor bound by the collective bargaining agreement? - -Yes a successor clause in a collective
bargaining agreement is binding on a successor for up to three years.
-A contractor entered into a home improvement contract for more than $500 with Mrs. Swenson to
remodel her kitchen and bathroom. The contract calls for a down payment before work is to begin.
According to the Business and Professions Code, how much may the contractor accept from Mrs.
Swenson as down payment for the work? - -The down payment is limited to $1,000 or 10% of the total
price, which ever is less.
-A contractor finds a 6" discrepancy on a set of plans. The contractor should: - -Contact the architect or
the building designer.
,-A contractor has been turned in to DOSH by an employee for a safety violation. The contractor wants to
find out who reported the violation and asked DOSH for the employee's name. What will DOSH likely
do? - -Unless requested otherwise, DOSH will keep confidential the name of any person making a
complaint, and no retaliation may be directed at the employee if the employee's identity is discovered.
-A contractor has had a problem with employees stealing tools and equipment from job sites. When
conducting job interviews, may the contractor ask prospective employees about their arrest records?
A. It is legal to ask prospective employees about arrests not leading to convictions.
B. It is not legal to ask prospective employees about arrests not leading to convictions.
C. It is legal for a private employer to ask about arrests not leading to convictions, but it would not be
legal for city or county agencies to ask about such arrests.
D. It is legal for a private employer to ask about arrests leading to convictions, but it would not be legal
for a federal, state, or local public agency to do so. - -It is not legal to ask prospective employees about
arrest not leading to convictions.
-A contractor hires a subcontractor to demolish a concrete wall. Who is responsible for supplying safety
goggles. - -Subcontractor
-A contractor is bidding on a project for a homeowner. The homeowner has included several "extra"
items to be bid upon. After receiving the bid, the homeowner said it was too high and asked the
contractor to lower the price. What should the contractor do? - -Negotiate with the homeowner to
reduce the scope of the work by eliminating some of the extra items.
-A contractor is looking for an insurance policy to cover a high degree of exposure to risk. Of the
following, which policy would be the best for this purpose?
A. Property
B. General Liability
C. Builder's Risk
D. Umbrella - -Umbrella policy. But the umbrella policy would only cover the high degree of exposure if
it was covered by one of the underlying policies.
-A contractor meets Mr. Jones at his home to discuss remodeling. The contractor and Mr. Jones sign a
contract that includes a three-day cancellation form. After the contractor leaves, Mr. Jones decides not
to have the work done. Instead of using the cancellation form, Mr. Jones sends the contractor a letter by
first-class mail stating that he is canceling the contract. Is Mr. Jones' cancellation effective? - -Yes. Mr.
Jones' letter does cancel the contract because it indicates his intention not to be bound by the contract.
-A contractor usually will not be held liable for a supplier going on strike, but if your supplier did go on
strike what would you do? - -Contact the owner immediately.
-A contractor, on his own initiative, changed the design of a building and carried out the change. The
owner rejected the change and stated that the building has lost market value. If the owner takes the
, contractor to court and obtains a favorable judgment, the owner is: - -Due the cost of repairs or the loss
of market value.
-A contractor's license has expired. How long after the date of expiration does the contractor have to
renew the license before it becomes void? - -A contractor has five years after the date of expiration to
renew the license before it becomes void.
-A general contractor has obtained bids from several subcontractors for a private project. He notices
that one bid is substantially lower than the rest. Is it ethical and a good business practice for this
contractor to inform the subcontractor that the bid is substantially lower than the bids of the other
subcontractors? - -Yes. If the contractor has reason to believe that the subcontractor has made an error
in preparing his bid, the contractor should notify the subcontractor of the apparent error, but the
contractor may not disclose the amounts of the other bids.
-A licensed contractor contracts with a building owner to do a $900 improvement. When applying for a
building permit, the contractor checks the owner-builder box on the declaration form. Which of the
following statements is correct?
A.nThe contractor may check the box to avoid insurance charges.
B. The contractor should check the box so that the owner-builder verification will be mailed to the
owner.
C. The contractor may check the box because the contractor is the owner's employee.
D. The contractor may not check the owner-builder box because the owner contracted for the
improvement. - -The contractor may not check the owner-builder box because the owner contracted for
the improvement.
-A mechanics' lien is a written document that must be signed and verified by the claimant. The first and
third steps a contractor should take in filing a lien are listed below. Step 1: Obtain the exact legal
description of the property. Step 2: Step 3: Find out if the person requesting the work of improvement is
the owner. What is Step 2? - -Find out the name of the legal owner of the property as well as the
percent of ownership.
A mechanics' lien.
Step 1: Obtain the exact legal description of the property. Step 2: Find out the name of the legal owner
of the property as well as the percent of ownership.
Step 3: Find out if the person requesting the work of improvement is the owner.
-A notice canceling a home solicitation contract becomes effective when? - -When the written notice is
deposited in the mail.
-A notice of completion must be recorded within: - -A notice of completion must be recorded within 10
days after work is completed.
-A prime contractor decides to sub out the electrical work. How would the prime determine what price
to add for the electrical work? - -The prime gets a firm bid from the subcontractor.
QUESTIONS AND ANSWERS
_____, although usually the largest single item in a bid, can be fairly accurately determined. - -Materials
-"Contractors are required by law to be licensed and regulated by the Contractors' State License Board.
Any questions concerning a contractor may be referred to the Registrar, Contractors' State License
Board, P.O. Box 26000, Sacramento, California, 95826." This statement must be on: - -All prime
contracts.
-A balance sheet shows: - -A balance sheet shows assets and liabilities at a certain point in time.
-A client wants the house painted and carpet installed. What license classification(s) is/are required for
this work? - -Painting and decorating C-33 and floor covering C-15.
-A construction company was hiring a new crew and asked each prospective employee for their name,
address, and Social Security number. Several prospective employees remembered their Social Security
numbers but did not have a card or other documentation. The practice of relying on memorized Social
Security numbers is: - -Unacceptable: The actual Social Security card should have been inspected.
-A consumer may cancel a home solicitation contract at any time prior to midnight of the _____ after
the date of the transaction.
A. 2nd business day
B. 3rd business day
C. 5th business day
D. 7th calendar day - -A consumer may cancel a home solicitation contract at anytime prior to midnight
of the 3rd business day after the date of the transaction.
-A contractor bids on a home improvement project and earns the bid. Later, he decides not to take the
job. Which bond would protect the home owner? - -A bid bond would protect the client from a
contractor who declines to take a job that has already bid.
-A contractor buys a construction firm from a person who is retiring. There is an existing collective
bargaining agreement with a successor clause that is good for three years. As the new owner, is the
contractor bound by the collective bargaining agreement? - -Yes a successor clause in a collective
bargaining agreement is binding on a successor for up to three years.
-A contractor entered into a home improvement contract for more than $500 with Mrs. Swenson to
remodel her kitchen and bathroom. The contract calls for a down payment before work is to begin.
According to the Business and Professions Code, how much may the contractor accept from Mrs.
Swenson as down payment for the work? - -The down payment is limited to $1,000 or 10% of the total
price, which ever is less.
-A contractor finds a 6" discrepancy on a set of plans. The contractor should: - -Contact the architect or
the building designer.
,-A contractor has been turned in to DOSH by an employee for a safety violation. The contractor wants to
find out who reported the violation and asked DOSH for the employee's name. What will DOSH likely
do? - -Unless requested otherwise, DOSH will keep confidential the name of any person making a
complaint, and no retaliation may be directed at the employee if the employee's identity is discovered.
-A contractor has had a problem with employees stealing tools and equipment from job sites. When
conducting job interviews, may the contractor ask prospective employees about their arrest records?
A. It is legal to ask prospective employees about arrests not leading to convictions.
B. It is not legal to ask prospective employees about arrests not leading to convictions.
C. It is legal for a private employer to ask about arrests not leading to convictions, but it would not be
legal for city or county agencies to ask about such arrests.
D. It is legal for a private employer to ask about arrests leading to convictions, but it would not be legal
for a federal, state, or local public agency to do so. - -It is not legal to ask prospective employees about
arrest not leading to convictions.
-A contractor hires a subcontractor to demolish a concrete wall. Who is responsible for supplying safety
goggles. - -Subcontractor
-A contractor is bidding on a project for a homeowner. The homeowner has included several "extra"
items to be bid upon. After receiving the bid, the homeowner said it was too high and asked the
contractor to lower the price. What should the contractor do? - -Negotiate with the homeowner to
reduce the scope of the work by eliminating some of the extra items.
-A contractor is looking for an insurance policy to cover a high degree of exposure to risk. Of the
following, which policy would be the best for this purpose?
A. Property
B. General Liability
C. Builder's Risk
D. Umbrella - -Umbrella policy. But the umbrella policy would only cover the high degree of exposure if
it was covered by one of the underlying policies.
-A contractor meets Mr. Jones at his home to discuss remodeling. The contractor and Mr. Jones sign a
contract that includes a three-day cancellation form. After the contractor leaves, Mr. Jones decides not
to have the work done. Instead of using the cancellation form, Mr. Jones sends the contractor a letter by
first-class mail stating that he is canceling the contract. Is Mr. Jones' cancellation effective? - -Yes. Mr.
Jones' letter does cancel the contract because it indicates his intention not to be bound by the contract.
-A contractor usually will not be held liable for a supplier going on strike, but if your supplier did go on
strike what would you do? - -Contact the owner immediately.
-A contractor, on his own initiative, changed the design of a building and carried out the change. The
owner rejected the change and stated that the building has lost market value. If the owner takes the
, contractor to court and obtains a favorable judgment, the owner is: - -Due the cost of repairs or the loss
of market value.
-A contractor's license has expired. How long after the date of expiration does the contractor have to
renew the license before it becomes void? - -A contractor has five years after the date of expiration to
renew the license before it becomes void.
-A general contractor has obtained bids from several subcontractors for a private project. He notices
that one bid is substantially lower than the rest. Is it ethical and a good business practice for this
contractor to inform the subcontractor that the bid is substantially lower than the bids of the other
subcontractors? - -Yes. If the contractor has reason to believe that the subcontractor has made an error
in preparing his bid, the contractor should notify the subcontractor of the apparent error, but the
contractor may not disclose the amounts of the other bids.
-A licensed contractor contracts with a building owner to do a $900 improvement. When applying for a
building permit, the contractor checks the owner-builder box on the declaration form. Which of the
following statements is correct?
A.nThe contractor may check the box to avoid insurance charges.
B. The contractor should check the box so that the owner-builder verification will be mailed to the
owner.
C. The contractor may check the box because the contractor is the owner's employee.
D. The contractor may not check the owner-builder box because the owner contracted for the
improvement. - -The contractor may not check the owner-builder box because the owner contracted for
the improvement.
-A mechanics' lien is a written document that must be signed and verified by the claimant. The first and
third steps a contractor should take in filing a lien are listed below. Step 1: Obtain the exact legal
description of the property. Step 2: Step 3: Find out if the person requesting the work of improvement is
the owner. What is Step 2? - -Find out the name of the legal owner of the property as well as the
percent of ownership.
A mechanics' lien.
Step 1: Obtain the exact legal description of the property. Step 2: Find out the name of the legal owner
of the property as well as the percent of ownership.
Step 3: Find out if the person requesting the work of improvement is the owner.
-A notice canceling a home solicitation contract becomes effective when? - -When the written notice is
deposited in the mail.
-A notice of completion must be recorded within: - -A notice of completion must be recorded within 10
days after work is completed.
-A prime contractor decides to sub out the electrical work. How would the prime determine what price
to add for the electrical work? - -The prime gets a firm bid from the subcontractor.
