CSLB Law & Business ExamContract Requirements and ExecutionHard
A homeowner contracts with a pool contractor to build an $8,000 spa. Under California's special down payment rule for swimming pool/spa contracts, what is the maximum down payment the contractor may collect?
- A$800
- B$80
- C$200
- D$160
Show answer & explanationAnswer & explanation
Correct answer: D. $160
The swimming pool down payment rule caps the down payment at the LESSER of $200 or 2% of the contract price. Here, 2% of $8,000 is $160, which is less than $200, so $160 is the maximum allowable down payment.
Why the other options are wrong
- A. This is 10% of the price, far above the swimming pool cap.
- B. This is 1% of the price, not the correct 2% calculation.
- C. $200 only applies when 2% of the price exceeds $200, which is not the case here.
Swimming Pool Down Payment Calculation
The swimming pool down payment cap is the lesser of $200 or 2% of the contract price; for lower-priced contracts, the 2% figure can be less than $200.
- Formula: min($200, 2% of price)
- At $10,000 price, 2% equals exactly $200
- Below $10,000, the 2% figure becomes the binding (smaller) limit
Memory trick: Two percent or two hundred — whichever is thinner wins.