California Contractors License Law Practice Exam

Which of the following is required in changes made in a contract?

1. Changes must be verbal only

2. Changes need only the prime contractor's approval

3. All parties must sign changes over a specified amount

4. Changes can be made without any formal agreement

The correct answer is: All parties must sign changes over a specified amount

In construction contracts, any significant changes to the original agreement must be documented properly to ensure that all parties are aware of and agree to the modifications. This is particularly crucial when changes involve a certain monetary threshold, as documentation safeguards the interests of all involved by providing a clear record of what has been agreed upon. Requiring signatures from all parties for changes that exceed a specified amount helps prevent misunderstandings and disputes later on. Without this requirement, one party could assert that a change was approved, while another might contest it, leading to potential legal challenges. Therefore, the practice of documenting and formalizing changes strengthens accountability and clarity in contract performance. The other options lack this emphasis on formal documentation and agreement among all parties, which can lead to complications in enforcement and interpretation of the contract.