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Law and Order CHAP 3

Contract Procedures

3A: In order to have a contract, these 4 components must exist offer, acceptance, consideration, legality
3A: What is the mirror image rule? If a customer accepts a bid it must be the exact bid without any changes
3A: Define Consideration in a contract when both parties give up something of value or performance (cash for goods/services)
3A: Define Legality in a contract Legality ensures the contract is enforceable by law, this means the contract cannot violate the law
3A: If you are contracting with an authorized agent of the owner, you should incorporate a statement holding the agent legally responsible for paying
3B: Four or fewer unit contracts (most residential) must include which disclosure? CSLB requirements/ info on how to check my license
3B: Four or fewer unit contracts (most residential) must disclose contractor violations if my license has been suspended twice in 8 years
3B: What are the font requirements for disclosure requirements? 10 point Roman boldface
3B: Which disclosure is required on ALL prime contracts? CSLB requirements and address
3B: Which contracts must disclose Mechanics Lien Warning? Home Improvement Contracts
3B: Which contracts include General Liability disclosure, font requirements? all single family dwellings ; heading= 14 point, questions 12, answers 11
3C: a HIC must include a start date, along with a statement of what constitutes substantial commencement
3C: a HIC must include whether or not there will be a downpayment, a downpayment cannot exceed ____ $1,000 or 10% whichever is less
3C: What is a Schedule of Payments? payments to be made prior to the completion of the work, included in the HIC
3C: What is the key limitation of a Schedule of Payments cannot exceed the amount of labor or material delivered up to that point
3C: When should a HIC include Workers Compensation Insurance Notice always
3C: Which bond(s) must the HIC state that the owner may require if desired? performance and payment bond
3C: The contractor is violating the Contractors License Law if he, without lawful excuse, fails to commence work within ___ 20 days
3D: When must an individual be registered as Home Improvement Salesperson when they solicit/ negotiate contracts outside of the contractors place of business
3D: When are you exempt from registering as a Home Improvement Salesperson when you are an owner, RME, officer, Partner of the business
3D: When can a contractor or salesperson give a gift to a prospective customer under 5 dollars and not contingent on signing
3D: What Is the consequence for Violating Home Improvement Salesperson Laws $100-$5,000 and/or 1 year imprisonment
3E: What 3 elements should a change order contain the work to be done, the total price of the change, total price of the new contract including the change
3F: What is a Home Solicitation Contract any contract made outside of the contractor’s normal place of business
3F: What is the key element of a Home Solicitation Contract the owners right to cancel
3F: How long does the owner/buyer have a right to cancel after signing the contract 3 business days
3F: How long does the Contractor have to return any amount payed after Notice of Cancellation 10 days
3F: How long does the buyer have to return goods received after Notice of Cancellation 20 days
3F: In an emergency situation, right to cancel ends if _________ the buyer furnishes contract waiving right to cancel and describing emergency
3F: If a contract is for work caused by a State of Emergency, the right to cancel extends to 7 days
3F: What are the limitations on a Contractors price during a State of Emergency cannot exceed 10% for 180 days following
3F: What is the consequence for “Price Gouging” during a State of Emergency No more than 1 year in jail and/or $10,000
3G: What are 4 requirements for Service and Repair contracts $750 or less, buyer initiates, only fix particular problem, no payment until completion
3G: In a Service & Repair contract, the owners right to cancel ends _____ upon commencement of contracted work
3G: Which 3 elements must be addressed in a S&R contract spare parts, service charges, right to cancel
3G: When is it ok for the contractor to take spare parts in a S&R contract if the owner signs a statement allowing him to do so
3G: How many “service charges” can be included in a S&R contract only 1
3G: On a S&R contract, which statement must be in immediate proximity to the signature line right to cancel expires when you sign contract and work begins
3H: Under what circumstance would a Mechanics Lien be filed When an employee, contractor or supplier does not receive payment
3H: A Person filing a Lien must have dealt DIRECTLY with ______ the owner or the owners agent (prime contractor, etc.)
3H: The Contractor or Supplier must make sure the owner is aware of the work or materials by filing a ____ Preliminary 20 day notice
3H: The Mechanics Lien may be filed within ____ days following the completion of the contract 90 days
3H: What are the 2 ways a owner or contractor can shorten the 90 day lien period Notice of Completion or Notice of Cessation
3H: Notice of Completion or Notice of Cessation are filed with the county recorders office
3H: Notice of Completion must be filed within _____ of completion of work 10 days
3H: A Notice of Completion or Cessation shortens the Lien Period to 30 days for a subcontractor, 60 days for a prime contractor
3H: A Notice of Cessation must be filed within ______ of work stoppage 30 days
3H: A Notice of Cessation documents that the Contract has been legally terminated
3H: A contract is not legally terminated unless ______ lapses from the last date of work 60 days
3H: The Contractor should also file a _____ to “perfect” the Lien Lawsuit
3H: An owner can free his property from a Lien by resolving the dispute or posting a bond equal to 1 1/4 times the amount of the Lien
3H: A Contractor cannot file a Lien on _____ Public Works Projects
3I: What is the purpose of a Preliminary 20 day notice To make sure all parties with monetary interest in a contract are aware of who can file a Lien
3I: If a Preliminary 20 day notice is require, to whom must it be given Prime Contractor, Owner, and Lender
3I: When must a Preliminary 20 day notice be given within 20 days after the subcontractor starts work or supplier provides material
3I: If a Subcontractor enters into a contract for _____ or more, he must provide a 20 day prelim $400
3I: A contractor who contracts with someone who is not the owner MUST provide a Preliminary 20-day notice
3I: What are the 2 instances that always require 20 day prelims jobs funded by construction loans, public works projects
3I: 4 basic requirements for 20 day prelim Name/Address of parties, description of goods/services, description of jobsite, statement of lien rights
3I: What are the 2 accepted methods of evidence a 20 day prelim was received signature of owner, registered mail with receipt
3I: a benefit of filing a 20day prelim with county is ____ the contractor will be notified of any Notice of Completions or Cessations filed
3J: If a contractor contracts with a tenant or agent, the owner may choose not to be held responsible by filing a Notice of Non-Responsibility
3J: What is the time frame for a Notice of Non Responsibility to be filed? Within 10 days following the 20 day prelim notice
3J: When can the Owner ask the contractor or supplier to release Lien Rights? after they have been payed in full
3K: How does a Contractor ensure payment on a Public Project Stop Notice
3K: How does a Stop Notice function by obligating the Lender or Awarding Authority to withhold enough money in case the Stop Notice is valid
3K: What must the Contractor be able to present along with a Stop Notice a bond worth 1 ¼ the amount of the claim
Created by: yobryan2009



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