CSLB Law & Business ExamContract Requirements and ExecutionMedium
A home improvement contract contains a mandatory arbitration clause. For this clause to be enforceable under California law, how must it be presented in the contract?
- AIt must be printed in at least 10-point bold type and separately signed or initialed by the homeowner
- BIt may appear anywhere in the document using the same font as the rest of the contract
- CIt only needs to be explained verbally by the contractor before signing
- DIt must be delivered as a separate document mailed to the homeowner after signing
Show answer & explanationAnswer & explanation
Correct answer: A. It must be printed in at least 10-point bold type and separately signed or initialed by the homeowner
California law requires arbitration clauses in consumer contracts, including home improvement contracts, to be conspicuously presented in at least 10-point boldface type and separately acknowledged (signed or initialed) by the homeowner so the waiver of rights is clearly understood.
Why the other options are wrong
- B. Standard, non-distinguished type fails the conspicuousness requirement.
- C. Verbal explanation alone does not meet the written disclosure standard.
- D. Mailing it afterward does not satisfy the requirement for disclosure at signing.
Arbitration Clause Disclosure
Arbitration clauses in home improvement contracts must be prominently displayed in bold type and separately acknowledged by the homeowner to be enforceable.
- Minimum 10-point bold type required
- Separate signature or initials needed
- Protects homeowner from unknowingly waiving jury trial rights
Memory trick: Bold and initialed — no hidden arbitration surprises.