CSLB Law & Business Set 1: Questions & Answers: Updated Solution

Question 1: How must a client submit a claim for service or repair of a defect on fit and finish items after a remodel? A.) by certified mail B.) by overnight mail C.) by personal delivery D.) any of the above (Ans- D. A client may use the normal customer-service procedures agreed to between the client and the contractor, but the client must notify the contractor of the defect in writing by certified mail, overnight mail, or personal delivery before the client may file an action in court. Question 2: What is the maximum allowed travel distance from any point of a work area to a fire extinguisher? a.)25 feet b.)50 feet c.)75 feet d.)150 feet (Ans- 75 feet When should you renew contractors bond? (Ans- 30 days before bond expires Question 4: If, during excavation, you unearth human remains or burial artifacts at a construction site, what should you do? Click here to select answer B. Notify the owner of the property. Click here to select answer B. Stop work and place a warning ribbon three feet from the remains around the perimeter of the site. Click here to select answer C. Stop work immediately at that site. Click here to select answer D. Stop work immediately at that site and any other nearby area that may have remains. (Ans- Stop work immediately at that site and any other nearby area that may have remains. Question 5: Direct costs are $37,000, overhead is 12%, and profit is 5%. What is the selling price? Click here to select answer A. $39,272.47 Click here to select answer B. $41,373.45 Click here to select answer C. $43,383.37 Click here to select answer D. $44,578.31 (Ans- D. The following solution is based on one of the references listed in the CSLB Study Guide. The solution may seem unorthodox, but you must follow each step to arrive at the State's answer. Sum of overhead and profit percentages = 12% + 5% = 17% Percent of selling price that is direct costs = 100% - 17% = 83% = .83 Selling price = $37,000 ÷ .83 = $44,578.31 To check these calculations, add the subtotals: Direct costs = $44,578.31 × .83 = $37,000.00 Overhead = $44,578.31 × .12 = $5,349.40 Profit = $44,578.31 × .05 = $2,228.92 $37,000.00 + $5,349.40 + $2,228.92 = $44,578.32 Who pays FUTA? a. employer b. employee c. 50% employer and 50% employee d. 90% employer and 10% employee (Ans- A.) Employer When you get an approved set of plans, what should you do first? (Ans- Read any notes from the building department. Of the following, which is best for determining the number of hours required for different phases of a project and for making sure the job is on schedule? (Ans- critical path method Which of the following provisions may not be included in a home improvement contract? Click here to select answer A. Owner must pay for materials after they are delivered. Click here to select answer B. Owner must pay for materials before they are delivered. Click here to select answer C. The contractor may require a downpayment. Click here to select answer D. Owner may make progress payments. (Ans- Owner must pay for materials before they are delivered. B. The CONTRACTORS LICENSE LAW states: It is against the law for a contractor to collect payment for work not yet completed, or for materials not yet delivered. However, a contractor may require a downpayment. How many times may you take the contractor's license exam before your original application is voided? (Ans- as many times as necessary within 18 months If it is discovered that the construction materials in an area contain more than 0.1% asbestos: Click here to select answer A the crew should try not to disturb the area but keep working. Click here to select answer B the contractor should contact DOSH immediately. Click here to select answer C the workers should stop and remove the materials wearing masks and gloves. Click here to select answer D the crew should wet down the area with water and continue working. (Ans- the contractor should contact DOSH immediately. B. Any manufactured material containing more than one-tenth of one percent (0.1%) asbestos by weight meets the definition of "asbestos-containing material"." Even if the surface area of these materials is less than 100 square feet, the contractor must file a report with the Occupational Carcinogen Control Unit of DOSH. Which of the following are the most effective when used together on a private works project? Click here to select answer A stop payment notice and mechanics lien Click here to select answer B notice of cessation and mechanics lien Click here to select answer C preliminary notice and stop payment notice Click here to select answer D notice of non-responsibility and mechanics lien (Ans- A. Mechanics liens and stop payment notices may be used on private works. The mechanics lien is a lien on the property, and the stop payment notice is a lien on funds. A mechanics lien alone may not be sufficient. A lender's deed of trust recorded prior to commencement of work would have priority over a mechanics lien or the owner's equity in the property may be less than the amount stated in the lien. Note that the Prime Contractor may serve a stop payment notice only on the construction lender, not the property owner.