CSLB Law & Business Set 1 All Answers Correct
1. How should a client file a claim for service or repairs related to defects in fit and finish items after a
remodeling project?
- A. Through certified mail.
- B. Via overnight mail.
- C. By personal delivery.
- D. Any of the above.
- Answer: D. The client may use any of the usual customer service procedures agreed upon with the
contractor, but they must inform the contractor in writing about the defect through certified mail,
overnight mail, or personal delivery prior to taking legal action.
2. What is the maximum distance that should be allowed from any point in a work area to a fire
extinguisher?
- A. 25 feet.
- B. 50 feet.
- C. 75 feet.
- D. 150 feet.
- Answer: C. 75 feet.
3. When is it necessary to renew a contractor's bond?
- Answer: 30 days before the bond is set to expire.
4. If you come across human remains or burial artifacts during excavation at a construction site, what
steps should you take?
- A. Notify the property owner.
- B. Stop work and mark the area with a warning ribbon three feet around the remains.
- C. Halt work immediately at that location.
- D. Stop work immediately in that area and any other nearby locations where remains may exist.
, - Answer: D. Stop work immediately in that area and any other nearby locations where remains may
exist.
5. If direct costs total $37,000, overhead is at 12%, and profit is at 5%, what will be the selling price?
- A. $39,272.47
- B. $41,373.45
- C. $43,383.37
- D. $44,578.31
- Answer: D. To calculate, add overhead and profit percentages (12% + 5% = 17%). The percentage of
selling price attributed to direct costs is 100% - 17% = 83% (or 0.83). Therefore, selling price = $37,000 ÷
0.83 = $44,578.31. To verify, calculate the components: Direct costs = $44,578.31 × 0.83 = $37,000.00;
Overhead = $44,578.31 × 0.12 = $5,349.40; Profit = $44,578.31 × 0.05 = $2,228.92. The total equals
$37,000.00 + $5,349.40 + $2,228.92 = $44,578.32.
6. Who is responsible for paying the Federal Unemployment Tax Act (FUTA)?
- A. Employer.
- B. Employee.
- C. 50% by the employer and 50% by the employee.
- D. 90% by the employer and 10% by the employee.
- Answer: A. Employer.
7. Upon receiving an approved set of plans, what is the first action you should take?
- Answer: Review any notes provided by the building department.
8. Which method is most effective for determining the required hours for various phases of a project
and ensuring it stays on schedule?
- Answer: The critical path method.
9. Which of the following clauses may not be included in a home improvement contract?
- A. The owner must pay for materials after they have been delivered.
- B. The owner must pay for materials before they are delivered.
, - C. The contractor may require a down payment.
- D. The owner is allowed to make progress payments.
- Answer: B. The owner must pay for materials before they are delivered.
- Note: As per the Contractors License Law, it is illegal for a contractor to collect payment for work that
is not yet completed or for materials that have not yet been delivered. However, a contractor may ask
for a down payment.
How many times may you take the contractor's license exam before your original application is voided?
✔️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. ✔️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 ✔️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.
After a job is completed, the owner decides to have additional work done. How should the contractor
proceed? ✔️Write a new contract and ask the owner to sign it.
When should you let your attorney see a construction contract?
Click here to select answer A.
Before you let your client see the contract.
Click here to select answer B.
After the contract is prepared, but before you sign it.
Click here to select answer C.
After the building permit is obtained.
Click here to select answer D.
After the contract is signed by you and your client. ✔️After the contract is prepared, but before you
sign it.
Business records must be kept and made available for inspection by the Registrar of Contractors for a
period of _____ after completion of a construction project or operation.
1. How should a client file a claim for service or repairs related to defects in fit and finish items after a
remodeling project?
- A. Through certified mail.
- B. Via overnight mail.
- C. By personal delivery.
- D. Any of the above.
- Answer: D. The client may use any of the usual customer service procedures agreed upon with the
contractor, but they must inform the contractor in writing about the defect through certified mail,
overnight mail, or personal delivery prior to taking legal action.
2. What is the maximum distance that should be allowed from any point in a work area to a fire
extinguisher?
- A. 25 feet.
- B. 50 feet.
- C. 75 feet.
- D. 150 feet.
- Answer: C. 75 feet.
3. When is it necessary to renew a contractor's bond?
- Answer: 30 days before the bond is set to expire.
4. If you come across human remains or burial artifacts during excavation at a construction site, what
steps should you take?
- A. Notify the property owner.
- B. Stop work and mark the area with a warning ribbon three feet around the remains.
- C. Halt work immediately at that location.
- D. Stop work immediately in that area and any other nearby locations where remains may exist.
, - Answer: D. Stop work immediately in that area and any other nearby locations where remains may
exist.
5. If direct costs total $37,000, overhead is at 12%, and profit is at 5%, what will be the selling price?
- A. $39,272.47
- B. $41,373.45
- C. $43,383.37
- D. $44,578.31
- Answer: D. To calculate, add overhead and profit percentages (12% + 5% = 17%). The percentage of
selling price attributed to direct costs is 100% - 17% = 83% (or 0.83). Therefore, selling price = $37,000 ÷
0.83 = $44,578.31. To verify, calculate the components: Direct costs = $44,578.31 × 0.83 = $37,000.00;
Overhead = $44,578.31 × 0.12 = $5,349.40; Profit = $44,578.31 × 0.05 = $2,228.92. The total equals
$37,000.00 + $5,349.40 + $2,228.92 = $44,578.32.
6. Who is responsible for paying the Federal Unemployment Tax Act (FUTA)?
- A. Employer.
- B. Employee.
- C. 50% by the employer and 50% by the employee.
- D. 90% by the employer and 10% by the employee.
- Answer: A. Employer.
7. Upon receiving an approved set of plans, what is the first action you should take?
- Answer: Review any notes provided by the building department.
8. Which method is most effective for determining the required hours for various phases of a project
and ensuring it stays on schedule?
- Answer: The critical path method.
9. Which of the following clauses may not be included in a home improvement contract?
- A. The owner must pay for materials after they have been delivered.
- B. The owner must pay for materials before they are delivered.
, - C. The contractor may require a down payment.
- D. The owner is allowed to make progress payments.
- Answer: B. The owner must pay for materials before they are delivered.
- Note: As per the Contractors License Law, it is illegal for a contractor to collect payment for work that
is not yet completed or for materials that have not yet been delivered. However, a contractor may ask
for a down payment.
How many times may you take the contractor's license exam before your original application is voided?
✔️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. ✔️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 ✔️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.
After a job is completed, the owner decides to have additional work done. How should the contractor
proceed? ✔️Write a new contract and ask the owner to sign it.
When should you let your attorney see a construction contract?
Click here to select answer A.
Before you let your client see the contract.
Click here to select answer B.
After the contract is prepared, but before you sign it.
Click here to select answer C.
After the building permit is obtained.
Click here to select answer D.
After the contract is signed by you and your client. ✔️After the contract is prepared, but before you
sign it.
Business records must be kept and made available for inspection by the Registrar of Contractors for a
period of _____ after completion of a construction project or operation.
