CSLB CONTRACTOR'S LAW &
BUSINESS EXAM RATED A+
"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: - ANSWER-All prime contracts.
A balance sheet shows: - ANSWER-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? - ANSWER-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: -
ANSWER-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 - ANSWER-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? - ANSWER-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? -
ANSWER-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? -
ANSWER-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: -
ANSWER-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? - ANSWER-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. - ANSWER-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. - ANSWER-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? -
ANSWER-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 - ANSWER-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? - ANSWER-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? - ANSWER-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: - ANSWER-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? - ANSWER-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? - ANSWER-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. - ANSWER-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? -
BUSINESS EXAM RATED A+
"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: - ANSWER-All prime contracts.
A balance sheet shows: - ANSWER-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? - ANSWER-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: -
ANSWER-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 - ANSWER-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? - ANSWER-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? -
ANSWER-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? -
ANSWER-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: -
ANSWER-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? - ANSWER-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. - ANSWER-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. - ANSWER-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? -
ANSWER-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 - ANSWER-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? - ANSWER-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? - ANSWER-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: - ANSWER-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? - ANSWER-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? - ANSWER-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. - ANSWER-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? -
