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Business Organization & Licensing — California C-20 Practice Questions

30 questions · 13% of the Law & Business exam

Worked questions

1. A contractor leaves its license inactive to save fees but signs two new construction contracts. May it enter those contracts while inactive?

  • ANo, because inactive licenses can never be reactivated
  • BYes, if work begins later
  • No; reactivate and verify proper status before contracting
  • DYes, if the customer agrees

Why C is correct

The best answer is: No; reactivate and verify proper status before contracting. Inactive status does not authorize new contracting activity. The entity should complete reactivation and confirm bond, insurance, qualifier, and classification requirements first. The new fact pattern changes the setting, not the governing rule or management control. The other choices either skip a required step, apply a different rule, or fail to address the stated risk.

29 more in the bank

Answers and explanations for these are in the app.

  • A C-10 licensee is asked to perform unrelated structural remodeling as the only trade. What should be checked?
  • A contractor advertises under a name not associated with its CSLB record. What should happen?
  • A corporation signs a construction contract, but the qualifying officer signs only a personal nickname. What should the contract identify?
  • A qualifying individual lends a name to a company but exercises no supervision or control over construction operations. What is the issue?
  • A sole-owner licensee incorporates a new company. May the corporation automatically contract under the individual license?
  • A subcontract proposal displays a license number belonging to a different entity. What should the prime do?
  • Before signing a contract, why should the contractor confirm the entity license is active and properly classified?
  • May a contractor enter new contracts while its license is inactive?
  • May an unlicensed person divide one larger project into several invoices to stay below an exemption threshold?
  • The only qualifier leaves a licensed entity. What should management do first?
  • Two partners disagree about who may sign bids and borrow money for the contracting business. What should be established?
  • What identifying information is generally required in a licensed contractor’s construction advertising?
  • What should a responsible managing employee or officer be able to demonstrate?
  • Why should an LLC operating agreement define member and manager authority?
  • Why should corporate and personal funds and records be kept separate?
  • A C-36 contractor is offered a separate contract to alter structural beams with no plumbing component. Which licensing question comes first?
  • A contractor markets under a new fictitious name before associating it with the CSLB license record. What should occur before contracting under that name?
  • A corporation's estimator signs a large subcontract although no policy states who may bind the company. Which preventive control is most appropriate?
  • A corporation's license became suspended before it executed a new contract. Why must active status be restored first?
  • A corporation's proposal names only its officer and never identifies the licensed company that will perform the work. What should the agreement show?
  • A licensed company learns on Monday that its sole qualifier has resigned. What should the company address without delay?
  • A licensed contractor's online ad includes a phone number and logo but omits the CSLB number. What identifying information should be added?
  • A proposal uses an active license number, but it belongs to a sister company rather than the proposing entity. What must the prime confirm?
  • A qualifier appears on company records but never reviews bids, field operations, or workmanship. Which duty is being neglected?
  • An individually licensed contractor creates a corporation and accepts the corporation's first job before CSLB issues it a license. May the corporation lawfully rely on the individual's license?
  • An owner pays household bills directly from the contracting company's account and records them as job costs. Why should the practice stop?
  • An RME spends all working time at another business and cannot describe the licensed company's projects. What must the RME actually provide?
  • An unlicensed operator writes four $450 invoices for one $1,800 undertaking to claim each is below the small-job exemption. Does splitting the invoices make the work lawful?
  • Two LLC members each believe only the other can approve contracts over $100,000. Which governing document should resolve the authority question?

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