For service and repair contracts under $500 in California, which requirement applies according to B&P Code 7159.5?
Correct Answer
A) Written authorization is required if the final cost exceeds the estimate by more than $100
B&P Code 7159.5 allows service and repair work under $500 to proceed with oral agreements, but requires written authorization if costs exceed the original estimate by more than $100 or 10%, whichever is greater. This protects consumers from unexpected cost overruns.
Why This Is the Correct Answer
B&P Code 7159.5 permits service and repair work under $500 to proceed on an oral agreement, but it does not give the contractor a blank check. If the actual cost will exceed the original estimate by more than $100 or 10% (whichever is greater), the contractor must obtain written authorization before proceeding with the additional work. This protects consumers from unexpectedly large cost overruns on what they believed were minor repair jobs. Written authorization acts as a change order for oral-agreement jobs.
Why the Other Options Are Wrong
Option B: Only a written estimate is required before beginning work
A written estimate alone is not the only requirement — the statute also requires written authorization if the cost overrun exceeds $100 or 10%. Saying 'only a written estimate is required' omits the mandatory written authorization trigger for overruns, making this answer incomplete and incorrect.
Option C: A written contract is required with 3-day cancellation rights
A written contract with a 3-day cancellation right is required for HOME IMPROVEMENT contracts, not for service and repair contracts under $500. The 3-day right of rescission applies to larger, more complex home improvement jobs — not minor repair work. Confusing these two statute sections is a common exam trap.
Option D: Oral contracts are permitted with proper documentation of scope
While oral contracts ARE technically permitted for jobs under $500, saying 'oral contracts are permitted with proper documentation of scope' misrepresents the rule. The statute does not define 'proper documentation of scope' as the only requirement — the $100/10% overrun written-authorization rule still applies. This answer is too permissive and ignores the consumer protection element.
Memory Technique
Remember: 'Under $500, oral is OK — but if you go over by $100 or 10%, GET IT IN WRITING.' The $100 threshold is your safety valve: any significant cost increase needs written approval, even for a minor repair job.
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