A swimming pool contractor receives a $35,000 contract signed at the customer's home. The customer cancels within the 3-day period. What can the contractor legally retain?
Correct Answer
C) Nothing, full refund required
When a customer exercises their right to cancel, they are entitled to a full refund of all payments made, with very limited exceptions.
Why This Is the Correct Answer
Option C is correct. When a customer properly exercises their 3-day right to cancel a home improvement contract, California law entitles them to a full refund of all payments made. The contractor cannot retain any funds — no cancellation fees, no administrative charges, and no materials costs are permissible deductions. The contractor must return all deposits within 10 days of receiving the cancellation notice.
Why the Other Options Are Wrong
Option A: 10% cancellation fee
Option A is incorrect. California's Home Solicitation Sales Act does not permit contractors to retain a 10% cancellation fee when a customer exercises their statutory right to cancel. Any contract provision purporting to impose a cancellation fee that overrides the statutory refund right is void and unenforceable.
Option B: $500 administrative fee
Option B is incorrect. There is no statutory authorization for a contractor to retain a $500 administrative fee (or any administrative fee) when a customer exercises the right to cancel within the 3-day period. The right to cancel would be meaningless if contractors could deduct administrative costs from the refund.
Option D: Reasonable costs for materials ordered
Option D is incorrect. Although it may seem equitable for a contractor to recover costs for materials already ordered, California law does not permit this deduction when the customer cancels within the statutory 3-day period. The law places the risk of ordering materials before the cancellation period expires squarely on the contractor. Contractors are expected to wait until the cancellation window closes before ordering materials or beginning work.
Memory Technique
3-day cancel = 100% refund. No exceptions, no deductions, no fees. Think of it as a 'full reset button' — the contract is cancelled as if it never existed, and all money must be returned. The contractor's only protection is to wait until day 4 before ordering materials or starting work.
More California Questions
A homeowner signs a $15,000 home improvement contract on Monday at 2 PM at the contractor's office. Under California law, what is the latest time the homeowner can cancel the contract without penalty?
A swimming pool contract for $28,000 is signed on Wednesday at the customer's home. The contract includes proper cancellation notices. If the customer wants to cancel, they must do so by when?
Under California's prompt payment law, if a contractor submits a proper payment request to a property owner, payment is due within how many days?
A general contractor hires a subcontractor for $22,000. The general contractor receives payment from the owner but fails to pay the subcontractor within how many days, subjecting themselves to penalty interest?
Under California Civil Code Section 8180, when must a subcontractor serve a preliminary notice on a private work project?
Which of the following contracts is NOT subject to the 3-day right to cancel under California law?
A subcontractor completes roofing work on Tuesday, March 15th. The general contractor is paid by the owner on Friday, March 25th. Under California prompt payment laws, what is the latest date the general contractor must pay the subcontractor?
A contractor receives a progress payment of $18,000 from a property owner on Monday. The contractor owes subcontractors $12,000 of this amount. By what day must the contractor pay the subcontractors?
A swimming pool contractor enters into a $45,000 contract to install an in-ground pool. The contract includes a $5,000 down payment. What is the maximum down payment the contractor can legally collect under California law?
A contractor completes $15,000 worth of electrical work on a commercial building. The property owner disputes $3,000 of the charges. Under California prompt payment law, what amount must the owner pay within the required timeframe to avoid penalties?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
Under California Business and Professions Code 7159, what is the minimum threshold amount for a home improvement contract that requires specific written contract provisions?
Next Question
A swimming pool contract for $45,000 includes a change order for additional decking costing $3,200. The original contract was signed at the customer's home on Tuesday. What is the customer's right to cancel the change order?