Business and Law
The Business and Law domain tests the legal and administrative side of operating a DC general contracting business: licensing, contracts, liens, insurance, employment obligations, consumer protection, and permit responsibility. Questions here reward precise knowledge of DC-specific thresholds and procedures rather than general business intuition.
Licensing and business structure
A DC General Contractor license is issued through the Board of Industrial Trades, while the business itself needs a Basic Business License from the Department of Licensing and Consumer Protection. The license is tied to a qualifying party and is not transferable. Contractors must maintain general liability insurance and workers' compensation coverage for employees; allowing coverage to lapse can jeopardize the license. Unlicensed contracting is unlawful and can affect the contractor's ability to collect payment.
Contracts and consumer protection
DC's home improvement consumer protection rules require a written contract for home improvement work above the statutory dollar threshold, with a clear scope, price, payment terms, and a three-business-day right to cancel. Changes should be documented in writing. The DC Consumer Protection Procedures Act reaches unfair or deceptive trade practices, so misrepresenting licensing, insurance, or completion dates creates liability beyond the contract itself.
Liens and payment
Mechanic's lien rights arise under D.C. Code Title 40. A subcontractor or supplier must preserve lien rights by giving required notice and recording within the statutory deadline; missing the deadline generally defeats the lien. Contractors should also manage preliminary notices and lien waivers as payment progresses.
Employment and jobsite obligations
Workers' compensation, wage payment, and OSHA obligations apply on DC projects. Misclassifying employees as independent contractors is a recurring enforcement target.
Worked example
A homeowner signs a $18,000 kitchen contract on Monday, March 3. The contract includes the required three-business-day cancellation notice. The homeowner cancels on Wednesday, March 5. The cancellation is timely because it falls within three business days; the contractor must stop work and refund any deposit rather than claim a penalty. If the notice had been omitted, the contractor would face a consumer-protection problem.
Traps that cost marks
Assuming a Basic Business License alone authorizes contracting; omitting the cancellation notice; treating an oral change order as binding; recording a lien after the deadline; and ignoring DC-specific insurance or employment rules.