A corporation signs a CA construction contract, but only the owner's old sole-proprietor license is active. What is the licensing issue?
Correct Answer
A) The corporation needs its own proper license authority.
The business entity that enters the contract must hold the proper contractor license authority; an old sole-proprietor license does not automatically license a corporation.
Why This Is the Correct Answer
The business entity that enters the contract must hold the proper contractor license authority; an old sole-proprietor license does not automatically license a corporation.
Why the Other Options Are Wrong
Option B: 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 C: The customer can pick the licensed entity after completion.
The customer can pick the licensed entity after completion. skips the written authority, scope, price, notice, or release control needed for business entity licensing.
Option D: The contract is licensed if the logo looks the same.
The contract is licensed if the logo looks the same. skips the written authority, scope, price, notice, or release control needed for business entity licensing.
Memory Technique
Business Entity square for Checking Remodel: scope, authority, price, paper.
Reference Hint
Study anchor (closed-book): memorize Business entity licensing from CSLB licensing guidance; CSLB 2026 Law Book; California Business and. / Business and Professions Code contractor license entity requirements; know the rule or calculation trigger without relying on exam-room lookup.
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