An estimator says, 'We can sign the job under the old partnership license and switch to the corporation later.' What is the safest answer?
Correct Answer
D) The contracting entity should be properly licensed at the time it contracts.
The entity that enters the contract should hold the appropriate license authority when contracting.
Why This Is the Correct Answer
The entity that enters the contract should hold the appropriate license authority when contracting.
Why the Other Options Are Wrong
Option A: Use the prior license record while the new contracting entity signs the documents.
Use the prior license record while the new contracting entity signs the documents. skips the written authority, scope, price, notice, or release control needed for business entity licensing.
Option B: That is fine only if the contract is under $50,000.
That is fine only if the contract is under $50,000. skips the written authority, scope, price, notice, or release control needed for business entity licensing.
Option C: That is fine if the customer initials the license number.
That is fine if the customer initials the license number. skips the written authority, scope, price, notice, or release control needed for business entity licensing.
Memory Technique
Business Entity square for Preventing Contract: scope, authority, price, paper.
Reference Hint
Study anchor (closed-book): memorize Business entity licensing from CSLB 2026 Law Book; California Business and Professions Code; CSLB. / Business and Professions Code contractor license entity requirements; know the rule or calculation trigger without relying on exam-room lookup.
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