A homeowner calls a contractor to repair a leaking pipe. The parties sign a service and repair contract for $600 that covers only repair of the existing plumbing, with no alterations to the structure. Which statement about this contract is correct?
- ABecause the price is under $750, no written contract is required at all
- BThe contract may use simplified disclosures permitted for service and repair contracts, but the three-business-day right to cancel still applies unless a valid exception applies
- CThe contractor may collect the entire $600 as a down payment before starting work
- DService and repair contracts are exempt from the three-day right to cancel regardless of the contract amount
Show answer & explanationAnswer & explanation
Correct answer: B. The contract may use simplified disclosures permitted for service and repair contracts, but the three-business-day right to cancel still applies unless a valid exception applies
Service and repair contracts allow for simplified disclosures compared to full home improvement contracts, but the three-business-day right to cancel still applies unless a valid statutory exception (like a bona fide emergency) exists; the down payment cap of the lesser of $1,000 or 10% still applies, making $600 an illegal down payment.
Why the other options are wrong
- A. A written contract is still required even for smaller service and repair jobs.
- C. $600 exceeds the lesser-of-$1,000-or-10% down payment cap ($60 in this case).
- D. The three-day right to cancel is not automatically exempted just because it's a service and repair contract.
Service and Repair Contracts
Contracts limited to repair or maintenance of existing structures may use simplified disclosures, but they remain subject to the three-day cancellation right and down payment limits.
- Simplified disclosures permitted, not full exemption
- Three-day cancellation right still applies
- Down payment cap of lesser of $1,000 or 10% still governs
Memory trick: Simpler paperwork, same protections.