Section 5 of 7
CSLB Contracts Practice Questions
10 free practice questions on contracts, part of the Contract Requirements and Execution section (about 21% of the exam). Try each one, then open the answer: every choice is explained and the law is quoted.
Questions and answers
- Contract Requirements and Execution
1. Under Business and Professions Code section 7159, an agreement with a homeowner for home improvement work is a "home improvement contract" when the total contract price is more than what amount?
- A. $500
- B. $750
- C. $1,000
- D. $5,000
Show answerHide answer
Correct answer: A
A. $500
Correct answer
Section 7159 makes an agreement for home improvement work a home improvement contract when the total contract price, including all labor, services, and materials, is more than $500.
B. $750
$750 is the price limit for a service and repair contract. The home improvement contract threshold in section 7159 is more than $500.
C. $1,000
$1,000 is too high. Section 7159 covers home improvement work when the total contract price is more than $500.
D. $5,000
$5,000 is a limit in a different rule about security interests. The home improvement contract threshold is more than $500.
Explanation
Section 7159 defines a home improvement contract as an agreement for home improvement work when the total contract price, including all labor, services, and materials, is more than $500. Contracts over this amount must meet the written contract rules in section 7159. $750 is the price limit for a service and repair contract. $5,000 is a limit in a different rule about security interests.
Source
Bus. & Prof. Code §7159(b)
if the aggregate contract price specified in one or more improvement contracts, including all labor, services, and materials to be furnished by the contractor, exceeds five hundred dollars ($500).
View source: Bus. & Prof. Code §7159(b)Official site for Bus. & Prof. Code §7159(b) (opens in a new tab)
- Contract Requirements and Execution
2. A homeowner calls a contractor about a burst pipe flooding the house. The repair is needed right away to protect the property. Under Civil Code section 1689.13, how can the buyer give up the right to cancel?
- A. By telling the contractor over the phone that the repair job is an emergency
- B. By signing and dating a separate statement describing the emergency and waiving the right
- C. By paying the full price in cash before the work begins today
- D. By initialing a box in the contract that says no cancellation applies
Show answerHide answer
Correct answer: B
A. By telling the contractor over the phone that the repair job is an emergency
A phone call does not meet the rule. The buyer must give the seller a separate, dated, and signed statement that describes the emergency and expressly waives the right to cancel.
B. By signing and dating a separate statement describing the emergency and waiving the right
Correct answer
Section 1689.13 requires the buyer to give the seller a separate, dated, and signed statement that describes the situation needing immediate remedy and expressly waives the right to cancel. This option matches that rule.
C. By paying the full price in cash before the work begins today
A cash payment does not meet the rule. The buyer must give a separate, dated, and signed statement that describes the emergency and expressly waives the right to cancel.
D. By initialing a box in the contract that says no cancellation applies
The waiver must be a separate statement, so initialing a box in the contract does not meet the rule. The statement must also be dated, signed, and describe the emergency.
Explanation
Civil Code section 1689.13 lets the cancellation rules be set aside for emergency repairs that the buyer started by calling the contractor. The buyer must give the seller a separate, dated, and signed statement. The statement must describe the emergency and expressly waive (give up) the right to cancel. A phone call, a cash payment, or a box in the contract does not meet this rule.
Sources
Civ. Code §1689.13(c)(1)
The buyer gives the seller a separate statement that is dated and signed that describes the situation that requires immediate remedy, and expressly acknowledges and waives the right to cancel the sale within three, five, or seven business days, whichever applies.
View source: Civ. Code §1689.13(c)(1)Official site for Civ. Code §1689.13(c)(1) (opens in a new tab)
Civ. Code §1689.13(b)
The contract is executed in connection with making of emergency or immediately necessary repairs that are necessary for the immediate protection of persons or real or personal property.
View source: Civ. Code §1689.13(b)Official site for Civ. Code §1689.13(b) (opens in a new tab)
- Contract Requirements and Execution
3. A salesperson makes the oral sales presentation for a home improvement job in Spanish. In what language must the right to cancel notice be written?
- A. In Spanish, the language mainly used in the sales talk
- B. In English, because contracts must be in English
- C. In both English and Chinese, as state forms require
- D. In any language that the contractor prefers for its own forms
Show answerHide answer
Correct answer: A
A. In Spanish, the language mainly used in the sales talk
Correct answer
Section 7159 says the right to cancel notice must be written in the same language, such as Spanish, as the one mainly used in the oral sales presentation.
B. In English, because contracts must be in English
An English-only notice does not meet the rule here. The notice must match the language mainly used in the oral sales presentation, which was Spanish.
C. In both English and Chinese, as state forms require
The rule ties the notice to the language mainly used in the oral sales presentation, which here was Spanish, not English and Chinese.
D. In any language that the contractor prefers for its own forms
The contractor does not get to pick the language. The notice must be in the language mainly used in the oral sales presentation.
Explanation
Business and Professions Code section 7159 says the right to cancel notice must be written in the same language as the one mainly used in the oral sales presentation. The law gives Spanish as an example. A buyer must be able to read the notice that explains the right to cancel. English only, or a language the contractor picks, does not meet the rule.
Source
Bus. & Prof. Code §7159(e)(6)(C)(iv)
The notice is written in the same language, e.g., Spanish, as that principally used in any oral sales presentation.
View source: Bus. & Prof. Code §7159(e)(6)(C)(iv)Official site for Bus. & Prof. Code §7159(e)(6)(C)(iv) (opens in a new tab)
- Contract Requirements and Execution
4. A roofing contractor tells a homeowner: "For each neighbor you sign up for a new roof with us, I will take $200 off your price." Under Business and Professions Code section 7157, is this allowed?
- A. Yes, because the reward is only a price credit and not a cash payment
- B. No, an owner may not get a reward for bringing in other business
- C. Yes, as long as the reward is written into each contract
- D. Yes, if each of the neighbors' contracts is for $5,000 or less
Show answerHide answer
Correct answer: B
A. Yes, because the reward is only a price credit and not a cash payment
Section 7157 names a credit as well as a payment, so a $200 price discount is still a forbidden reward.
B. No, an owner may not get a reward for bringing in other business
Correct answer
Correct. Section 7157 says no person may promise or offer to pay, credit, or allow an owner a reward for bringing in home improvement business with others; doing so is a misdemeanor and a cause for discipline.
C. Yes, as long as the reward is written into each contract
Putting the reward in writing does not make it legal; offering an owner any reward for bringing in other business is prohibited.
D. Yes, if each of the neighbors' contracts is for $5,000 or less
Keeping the neighbors' jobs small does not make it legal; the ban on rewarding an owner for bringing in business has no dollar exception.
Explanation
Business and Professions Code section 7157 says no person may promise or offer to pay, credit, or allow an owner a reward for bringing in (procuring) home improvement business with others. The statute names a credit as well as a payment, so a price discount is still a reward. Putting it in writing or keeping the jobs small does not make it legal. Breaking this rule is a misdemeanor (a minor crime) and a cause for discipline.
Sources
Bus. & Prof. Code §7157(a)
no person may promise or offer to pay, credit, or allow to any owner, compensation or reward for the procurement or placing of home improvement business with others.
View source: Bus. & Prof. Code §7157(a)Official site for Bus. & Prof. Code §7157(a) (opens in a new tab)
Bus. & Prof. Code §7157
Commission of any act prohibited by this section is a misdemeanor and constitutes a cause for disciplinary action.
View source: Bus. & Prof. Code §7157Official site for Bus. & Prof. Code §7157 (opens in a new tab)
- Contract Requirements and Execution
5. A buyer cancels a home improvement contract within the three-day period. The buyer makes the delivered goods available at home. The contractor does not pick them up within 20 days of the cancellation notice. Under Business and Professions Code section 7159, what may the buyer do?
- A. Pay for the goods at the contract price
- B. Ship the goods back at the buyer's own cost
- C. Keep the goods without any further obligation
- D. Hold the goods for another 30 days
Show answerHide answer
Correct answer: C
A. Pay for the goods at the contract price
The buyer does not have to pay for the goods. If the contractor does not pick them up within 20 days of the cancellation notice, the buyer may keep them without any further obligation.
B. Ship the goods back at the buyer's own cost
The buyer does not bear the cost of returning the goods. If the buyer follows the contractor's return instructions, it is at the contractor's expense and risk, not the buyer's.
C. Keep the goods without any further obligation
Correct answer
Under section 7159, if the buyer makes the goods available and the contractor does not pick them up within 20 days of the notice of cancellation, the buyer may keep them without any further obligation.
D. Hold the goods for another 30 days
There is no extra 30-day holding period. Once the contractor fails to pick up the goods within 20 days of the notice, the buyer may keep them.
Explanation
Business and Professions Code section 7159 sets out the Three-Day Right to Cancel notice. It says that if the buyer makes the goods available and the contractor does not pick them up within 20 days of the notice of cancellation, the buyer may keep them without any further obligation. The buyer does not have to pay for the goods. The buyer may follow the contractor's return instructions, but at the contractor's expense and risk, not the buyer's. There is no extra 30-day holding period.
Source
Bus. & Prof. Code §7159(e)(6)(B)
If you do make the goods available to the contractor and the contractor does not pick them up within 20 days of the date of your notice of cancellation, you may keep them without any further obligation.
View source: Bus. & Prof. Code §7159(e)(6)(B)Official site for Bus. & Prof. Code §7159(e)(6)(B) (opens in a new tab)
- Contract Requirements and Execution
6. A contractor builds a new single-family home. A swimming pool is part of the original building plan, and the same contractor builds it. Under Business and Professions Code section 7166, do the Article 10 rules apply to the pool contract?
- A. Yes, because every pool at a single-family home is covered
- B. Yes, but only if the pool is paid for with a loan
- C. No, because the pool is part of the builder's original plan
- D. No, because pool contracts are never covered by Article 10
Show answerHide answer
Correct answer: C
A. Yes, because every pool at a single-family home is covered
Not every pool at a single-family home is covered. Section 7166 takes out pools built as part of an original building plan by the same contractor who builds the single-family home.
B. Yes, but only if the pool is paid for with a loan
This exception does not depend on a loan. It applies because the pool is part of the original building plan and is built by the same contractor who builds the home.
C. No, because the pool is part of the builder's original plan
Correct answer
Section 7166 says Article 10 does not apply to swimming pools built as part of an original building plan by the same contractor who builds the single-family home on the property. That is the situation here.
D. No, because pool contracts are never covered by Article 10
Pool contracts can be covered by Article 10. Section 7166 only takes out certain pools, such as one built as part of the original plan by the same contractor who builds the single-family home.
Explanation
Business and Professions Code section 7166 says the Article 10 provisions do not apply to swimming pools built as part of an original building plan by the same contractor who builds the single-family home on the property. That is the situation here. So not every pool at a single-family home is covered, and this exception does not depend on a loan. Pool contracts can be covered by Article 10; section 7166 only takes out certain pools.
Source
Bus. & Prof. Code §7166
nor shall they apply to the construction of swimming pools built as part of an original building plan by the same contractor who builds a single-family dwelling unit on the premises.
View source: Bus. & Prof. Code §7166Official site for Bus. & Prof. Code §7166 (opens in a new tab)
- Contract Requirements and Execution
7. Under Business and Professions Code section 7159, which item must appear on the first page of a home improvement contract?
- A. The approximate date the work will be completed
- B. The name of the contractor's insurance company
- C. The date the buyer signed the contract
- D. The schedule of progress payments for the job
Show answerHide answer
Correct answer: C
A. The approximate date the work will be completed
The completion date must be in the contract, but the law does not require it on the first page. The first page must show the date the buyer signed.
B. The name of the contractor's insurance company
The insurer's name is not one of the first-page items, and the insurance notice may even be an attachment. The first page must show the date the buyer signed.
C. The date the buyer signed the contract
Correct answer
Correct. Section 7159 says the first page of the contract must show the date the buyer signed it.
D. The schedule of progress payments for the job
The schedule of progress payments must be in the contract, but the law does not require it on the first page. The first page must show the date the buyer signed.
Explanation
Business and Professions Code section 7159 says the first page of the contract must show the date the buyer signed it. The first page must also show the contractor's name, address, and email address for sending a Notice of Cancellation, and a telephone number to help the buyer. The completion date and the schedule of progress payments must be in the contract, but the law does not require them on the first page. The insurance notice may even be an attachment.
Sources
Bus. & Prof. Code §7159(c)(3)(B)
The contract shall contain on the first page, in a typeface no smaller than that generally used in the body of the document, both of the following:
View source: Bus. & Prof. Code §7159(c)(3)(B)Official site for Bus. & Prof. Code §7159(c)(3)(B) (opens in a new tab)
Bus. & Prof. Code §7159(c)(3)(B)(i)
The date the buyer signed the contract.
View source: Bus. & Prof. Code §7159(c)(3)(B)(i)Official site for Bus. & Prof. Code §7159(c)(3)(B)(i) (opens in a new tab)
- Contract Requirements and Execution
8. A contractor signs a contract to build a swimming pool at a 30-unit apartment complex. The pool is for all the tenants to use. Under Business and Professions Code section 7166, do the Article 10 home improvement rules apply to this pool contract?
- A. Yes, because swimming pools are listed as home improvements
- B. Yes, because each tenant lives in a residence unit
- C. No, because all swimming pool contracts are exempt
- D. No, because it is not for one single-family unit
Show answerHide answer
Correct answer: D
A. Yes, because swimming pools are listed as home improvements
Pools are home improvements in general, but section 7166 makes an exception. Article 10 does not apply to a pool built for the use of other than a single-family unit.
B. Yes, because each tenant lives in a residence unit
Tenants can be buyers in other cases, but section 7166 makes an exception here. A pool for the whole complex is not for one single-family unit, so Article 10 does not apply.
C. No, because all swimming pool contracts are exempt
Not all pool contracts are exempt. A pool for a single-family home is covered by Article 10; only pools for other than a single-family unit are excluded.
D. No, because it is not for one single-family unit
Correct answer
Correct. Section 7166 says Article 10 does not apply to pools built for the use of other than a single-family unit, and a pool for all the tenants of a 30-unit complex is not for one single-family unit.
Explanation
Business and Professions Code section 7166 says the Article 10 rules do not apply to pools built for the use of other than a single-family unit on or next to premises occupied only by a single-family unit. A pool for a whole apartment complex is not for one single-family unit, so the rules do not apply. Pools are home improvements in general, and tenants can be buyers in other cases, but this section makes an exception. Not all pool contracts are exempt; a pool for a single-family home is covered.
Source
Bus. & Prof. Code §7166
The provisions of Article 10 shall not apply to contracts for the construction of swimming pools to be built for the use and enjoyment of other than a single-family unit upon or contiguous to premises occupied only by a single-family unit
View source: Bus. & Prof. Code §7166Official site for Bus. & Prof. Code §7166 (opens in a new tab)
- Contract Requirements and Execution
9. When must a home improvement contractor give the buyer a copy of the contract that is signed and dated by both the contractor and the buyer?
- A. Within three business days after the work starts
- B. When the buyer makes the final payment for the job
- C. Only if the buyer asks for a copy in writing
- D. Before any work on the project is started
Show answerHide answer
Correct answer: D
A. Within three business days after the work starts
Three business days after work starts is too late. The signed and dated copy must be given before any work is started.
B. When the buyer makes the final payment for the job
Waiting until final payment is too late. Section 7159 requires the contractor to give the signed and dated copy before any work is started.
C. Only if the buyer asks for a copy in writing
The copy is not given only on request. The contractor shall give the buyer the signed and dated copy before any work is started.
D. Before any work on the project is started
Correct answer
Section 7159 says that before any work is started, the contractor shall give the buyer a copy of the contract signed and dated by both the contractor and the buyer. The buyer's receipt of this copy starts the buyer's right to cancel.
Explanation
Business and Professions Code section 7159 says that before any work is started, the contractor shall give the buyer a copy of the contract signed and dated by both parties. The buyer's receipt of this copy starts the buyer's right to cancel. Giving the copy later, or only on request, does not meet the rule.
Source
Bus. & Prof. Code §7159(c)(3)(A)
Before any work is started, the contractor shall give the buyer a copy of the contract that is signed and dated by both the contractor and the buyer.
View source: Bus. & Prof. Code §7159(c)(3)(A)Official site for Bus. & Prof. Code §7159(c)(3)(A) (opens in a new tab)
- Contract Requirements and Execution
10. A contractor signs a home improvement contract with a 50-year-old homeowner at the owner's home. It is not a disaster repair contract. How long does the buyer have to cancel?
- A. Until midnight of the third calendar day after signing the contract
- B. Until midnight of the fifth business day after receiving a signed copy
- C. Until midnight of the third business day after receiving a signed copy
- D. Until midnight of the seventh business day after the work starts
Show answerHide answer
Correct answer: C
A. Until midnight of the third calendar day after signing the contract
The period counts business days, not calendar days. It also runs from when the buyer receives a signed and dated copy, not from signing.
B. Until midnight of the fifth business day after receiving a signed copy
The five-day period is only for buyers who are senior citizens. This contract uses the Three-Day Right to Cancel, which gives three business days.
C. Until midnight of the third business day after receiving a signed copy
Correct answer
Section 7159 lets the buyer cancel by midnight of the third business day after receiving a signed and dated copy of the contract that includes the Three-Day Right to Cancel notice.
D. Until midnight of the seventh business day after the work starts
The seven-day period is for disaster repair contracts, and this is not one. The buyer here has until midnight of the third business day after receiving a signed and dated copy.
Explanation
Business and Professions Code section 7159 requires the Three-Day Right to Cancel notice for this kind of contract. The buyer may cancel by midnight of the third business day after receiving a signed and dated copy of the contract. The days are business days, not calendar days. The five-day period is only for buyers who are senior citizens, and the seven-day period is for disaster repair contracts.
Sources
Bus. & Prof. Code §7159(e)(6)(B)(i)
You, the buyer, have the right to cancel this contract within three business days.
View source: Bus. & Prof. Code §7159(e)(6)(B)(i)Official site for Bus. & Prof. Code §7159(e)(6)(B)(i) (opens in a new tab)
Bus. & Prof. Code §7159(e)(6)(B)(i)
by midnight of the third business day after you received a signed and dated copy of the contract that includes this notice.
View source: Bus. & Prof. Code §7159(e)(6)(B)(i)Official site for Bus. & Prof. Code §7159(e)(6)(B)(i) (opens in a new tab)
Keep studying
Read the Section 5 study notes: Contract Requirements and Execution