Law and Business Test 2 Flashcards
What is the best means to insure that funds are readily available for a job?
Check for cost overruns
What is the best way to choose the right insurance company?
Cost of coverage
What is the best means to check that all phases of a job have been performed?
Create a punch list
The problem of retention is greatest for whom?
Subcontractors who complete their work early in a project.
When a home improvement contract is signed, the contractor must substantially begin work within _____ days of the date specified in the contract?
20 days
Which of the following contracts can be cancelled by a customer?
A. Sub contract
B. Prime construction contract
C. Home solicitation contract which involves fencing, burglar, alarm, carpentry and texture coating.
D. Home improvement contract involving free standing bookcases, rugs and window air conditioner.
Home solicitation contract which involves fencing, burglar alarm, carpentry and texture coating.
Who must sign a joint control addendum to a home improvement contract?
Owner, contractor and joint control officer
Joint Control Addendum is when a third party is involved with the contract
A notice canceling a home solicitation contract becomes effective:
When the written notice is deposited in the mail.
When should a contractor renew his/her license number?
30 days before it expires
Which of the following individuals will be required to obtain a contractors license?
A. A civil service repairman
B. A pool supply company
C. A mill worker who constructs cabinets
D. An individual who repairs or monitors a fire alarm system
An individual who repairs or monitors a fire alarm system.
A license is only needed when working on a fixed structure
If a contractor forgets to renew the contractor’s license on time, then the expired license may be renewed anytime within _____ after its expiration without applying for the license and fulfilling the exam or waiver requirements again.
5 years
How many companies can an RME qualify for at a time?
Only one
However an RME can qualify for more than one company under certain circumstances.
Where must the contractor include the Notice to Owner?
In all home improvement contracts over $500
A Stop Notice is the only single means to force payment on a public-work job; you may not put a lien on the property. In the event a contractor may need to serve a Stop Notice on a public-works job, he should serve it to the…..?
Awarding authority
How old must a worker be to do heavy work in construction?
18 years of age
When is a worker considered an employee rather than an independent contractor?
When the employer has direct control over the work being performed.
A contractor buys a construction firm from a retiring person and there is an existing collective bargaining agreement with a successor clause that is good for three years. Is the contractor bound by the collective bargaining agreement as the new owner?
Yes, the successor clause is binding on a successor for up to 3 years.
If a contractor hires a subcontractor to do clean-up work, then whose responsibility is it that the subcontractor has workers’ compensation for his employees?
The prime contractor
In which of the following situations would the employer be held liable for payment of workers’ compensation benefits to an injured employee?
A. When the worker is injured due to the worker’s own willful misconduct.
B. When the worker is intoxicated at the work site.
C. The employer is always liable unless they can demonstrate that the employee is not eligible for benefits.
D. When the worker is not an employee but an independent contractor.
The employer is always liable unless he can demonstrate that the worker is not eligible for benefits.
Which of the following is not deducted from an employees paycheck? A. Unemployment Tax B. Federal and State Income Tax C. Social Security Tax D. State Disability Tax
Unemployment Tax
Unemployment taxes are paid by the employer only
If a strike shall occur, what would happen to the unpaid wages?
Wages are due and payable on the next regular pay day.
Does a contractor have any recourse if cited by OSHA?
Yes, the contractor can go to the Appeals Board
What is the most common source of start-up capital for a small contracting business?
Equity Funds
Funds obtained from owners and shareholders
What is the most common carcinogen found on a construction and demolition site?
Asbestos
Which of the following would be the best decision when starting a new business?
A. Hire a professional bookkeeper to handle the books.
B. Maintain your own books
C. Have anyone other than yourself handle the books.
D. None of the above
Hire a professional bookkeeper to handle the books.
Which of the following is a tangible asset? A. Notes due B. Rent C. Materials D. Mortgage
Materials
What is the minimum length of time that a contractor must keep a building report on file?
5 years
What will be the result if a figure is entered by mistake on the asset side of the balance sheet instead of the liability side?
The error will be twice as large
What is the best way to know what inventory you have at the job site?
Call the superintendent and have it checked
When may an employer obtain a temporary variance from OSHA?
A. The employer has just purchased a new business and finds that there are violations that will take a certain time to correct.
B. If the employer cannot comply with a new California standard that applies prior to the effective date of the standard.
C. If the employer has developed a new process or has new machinery and finds it is in violation and needs extra time to bring the new process or equipment into compliance.
D. All of the above
All of the above
The best way for a contractor to insure that he will have sufficient operating capital to meet his expenses for the first year, is to…?
Establish a line of credit before he starts to do business and draw on it as necessary.
If an owner/builder decides to hire a person to help with building a house, who is responsible for workers’ compensation?
The owner/builder
Which is not required on a home improvement contract?
A. The name and home address of all personnel listed on the license.
B. A notice, in at least 10 point print, in close proximity to the signature, and a statement that the owner has a right to require a performance and payment bond.
C. A description of the work to be done and materials and equipment to be used or installed.
D. An approximate date when work will begin and be substantially completed.
A. The name and home address of all personnel on the license is not needed.
What should you do if a supplier that you have ordered the material from goes on strike, and as a result you are unable to obtain the material you need for a job?
Buy from another supplier
The Contractor's State License Board will not accept \_\_\_\_\_\_\_\_\_\_\_\_\_\_ as an alternative to filing a license bond. A. Certified deposit B. Blue-Chip stocks C. U.S. Government bearer-bond D. Cash deposit
B. Blue-Chip stocks are unacceptable
Which of the following best describes the correct practice when making amendments to an existing contract?
A. Write to your customer and indicate the changes you are making and what the cost will be.
B. After the project is complete you should invoice the customer.
C. As a contractor, you cannot make any changes to an existing contract without the owner’s approval and/or signature.
D. The owner’s signature is not required if contractor and owner orally agreed on changes.
As a contractor you cannot make any changes to an existing contract without the owner’s approval and/or signature.
When must a contractor obtain workers’ compensation insurance?
When a contractor hires one or more employees
An employee that works with a contractor meets with a customer and negotiates a $432 verbal contract. He tells his employer about the contract, but the employer thinks that the contract is underestimated and does not want to perform the job. The Contractor’s License Law states:
The contractor is required by law to abide by the verbal agreement since verbal home improvement contracts under $500 are valid (binding)
For most contractors, the required bond needed to obtain a contractor’s license is:
$12,500
If your employee has reached his limit of FICA contributions, then what should you do as the employer?
Stop deduction for FICA
Before calling for final inspection, the contractor should walk through the project with the owner using a punch list to ensure:
The work is complete and the owner is satisfied.
If you are working in a potentially dangerous area, then you should:
Proceed with caution, making sure you take all responsible measures necessary to make the area safe, including the supervisor.
The major reason contractor’s go out of business is:
A. Poor scheduling and taking too many jobs
B. Financing one job by using money from another job.
C. Having many big bank loans
D. All of the above
All of the above
Which of the following is not a recommended billing practice?
A. Insist on cash for service calls
B. Encourage timely payments if the customer has good credit.
C. Consult an attorney if you are having collections problems.
D. Bill in a timely manner on a simple, itemized form and require payments in 30 days.
Encourage timely payments if the customer has good credit.
Which of the following is true regarding the Preliminary Notice?
A. A copy of the Notice is sent to the owner, prime, and the lender.
B. All subcontractors must use the Notice on all jobs
C. The Notice must include the dollar amount of the subcontractor’s portion of the job.
D. All of the above
All of the above
Who will not benefit from a contractor’s bond?
A. Any subcontractor damaged due to an accident
B. Any client damaged as a result of regulation violations by the contractor.
C. Any person damaged due to fraud on the part of the contractor.
D. Any employee damaged by the contractor’s failure to pay wages.
Any subcontractor damaged due to an accident is not covered by the prime contractor’s bond.