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Law and Order CHAP 3
Contract Procedures
| Question | Answer |
|---|---|
| 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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