A newly formed corporation wants to sign a $12,000 contract for work requiring a contractor’s license using the old partnership’s license number. What must be addressed before the corporation contracts?
Correct Answer
D) The contracting entity should be properly licensed at the time it contracts.
A newly formed corporation cannot simply contract using the partnership’s license. License authority belongs to the specified entity; customer initials and an arbitrary $50,000 cutoff do not transfer it. Complete the applicable licensing process for the corporation before it contracts for work requiring a license. Source: https://www.cslb.ca.gov/contractors/maintain_license/change_business_entity.aspx
Why This Is the Correct Answer
A newly formed corporation cannot simply contract using the partnership’s license. License authority belongs to the specified entity; customer initials and an arbitrary $50,000 cutoff do not transfer it. Complete the applicable licensing process for the corporation before it contracts for work requiring a license. Source: https://www.cslb.ca.gov/contractors/maintain_license/change_business_entity.aspx
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