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CSLB CONTRACTOR'S LAW & BUSINESS EXAM
/ COMPREHENSIVE STUDY GUIDE – EXPERT
STRATEGIES, REVIEW OF KEY QUIZZES, AND
PRACTICE QUESTIONS FOR GUARANTEED
SUCCESS / NEWEST
Question 1: 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?
CORRECT ANSWER : It is not legal to ask prospective
employees about arrests not leading to convictions.
Question 2: Is it legal for a contractor to require employees to
take lie detector tests?
CORRECT ANSWER : It is not legal for the contractor to
require lie detector tests, but it would be legal for a federal, state, or local public agency to require lie detector tests of their employees.
Question 3: Ms. Gomez applies for a job. Of the following, the
only reason an employer may lawfully deny her employment is:
a) She is a member of a minority group
b) She has no work experience or Social Security number
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c) She is over 40 years old
d) She is pregnant
CORRECT ANSWER : b) She has no work experience or Social
Security number
Question 4: A contractor is looking for an insurance policy to
cover a high degree of exposure to risk. Of the following, which policy would be best for this purpose?
a) General liability
b) Umbrella
c) Workers' compensation
d) Property
CORRECT ANSWER : b) Umbrella
Question 5: 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?
CORRECT ANSWER : The down payment is limited to $1000
or 10% of the total price, whichever is less.
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Question 6: How often are you required to pay sales tax?
CORRECT ANSWER : It depends on the expected amount of
taxable sales.
Question 7: Once a budget is finalized, the:
a) Contractor should do the best possible job of staying within
the budget
b) Owner should not expect any change orders
c) Contractor is not responsible for any budget overruns
d) Budget cannot be altered
CORRECT ANSWER : a) Contractor should do the best possible
job of staying within the budget
Question 8: A contractor and a homeowner sign a home
solicitation contract. If the owner lawfully cancels the contract, how long does the contractor have to pick up unused materials that were delivered to the owner's property?
CORRECT ANSWER : Within 20 days after cancellation
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Question 9: When purchasing insurance, what is the best way to
choose among different companies?
a) Reputation only
b) Cost and coverage
c) Coverage only
d) Cost only
CORRECT ANSWER : b) Cost and coverage
Question 10: Of the following, which document is usually
delivered first in a transaction involving a home improvement contract?
a) Mechanics Lien Warning
b) Notice of Right to Cancel
c) Contract
d) Preliminary Notice
CORRECT ANSWER : a) Mechanics Lien Warning
Question 11: How must a client submit a claim for service or
repair of a defect on fit and finish items after a remodel?
CORRECT ANSWER : A client may use the normal customer-
service procedures agreed to between the client and the