CSLB Contractor's Law & Business Practice Exam

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What is the primary reason for having a written contract?

To save on costs
To clarify obligations
To impress clients
To expedite work

The correct answer is: To clarify obligations

Having a written contract serves the primary purpose of clarifying obligations between the parties involved. This written document outlines the specific terms, conditions, and responsibilities that each party agrees to uphold. By detailing essential aspects such as the scope of work, payment terms, deadlines, and other critical elements, a written contract minimizes misunderstandings and disputes, ensuring that all parties are on the same page regarding what is expected. While saving on costs, impressing clients, or expediting work could be associated benefits of having a contract, they do not encapsulate the fundamental reason for its existence. The emphasis on clarity helps protect all parties by providing a reference that can be consulted in case of conflict, hence reinforcing the importance of having documented agreements in professional relationships.