Construction contract

Free Sample Construction Contract Templates

To help you grow your business, we've created a fairly simple yet reliable construction contract template in Word and PDF versions so you can use it over and over.

What's in this model?

• Work's extent

• Personal Information

• Terms and Conditions 

What is a construction contract?

A construction contract is an agreement between a client and a contractor that specifies the details of a construction project. It contains all the details that a client and the contractor need to know before starting work. It specifies the nature of the work, the number of days required, the details of the material used and all the clauses related to the construction work are included in the construction contract. The contract type also defines the financial terms of the construction contract.

The construction contract can be divided into several parts. The first part contains the legal information. The second part contains details of the project and the work that will be carried out. If the project is a commercial project, the construction contract should include a detailed description of the building to be constructed. It should also include the description of the interior or exterior layout, the list of materials to be used and the description of the work that will be carried out.

The third part of the construction contract contains information on deadlines and costs. This part also contains all the details that are necessary for the smooth running of the work. In addition to legal information, project details and costs, the fourth part of the construction contract contains warranty clauses. These clauses assure both parties that certain conditions will be met during the construction project. These conditions are also known as the warranty clauses. The sixth part of the construction contract contains termination clauses. In other words, this part describes the reasons that can cause the termination of the contract. The last part of the construction contract contains all the elements that are necessary for the conclusion of the contract, such as the acceptance of the parties or the release of payments.

What is building?

Construction is the development of buildings, edifices and other constructions. Construction is a service sector that requires a large number of skills. It can be physical, chemical, electrical, computer, but also legal. However, construction takes many different forms. There are traditional constructions but there are also innovative or ecological constructions. This is why construction is a very diversified activity.

Construction is necessary for any society, be it industry, agriculture or housing, for example. When we think of this activity, the first images that come to mind are often buildings, houses, bridges or roads. These aspects are also important, but there are other areas in which construction is an indispensable element, such as health, sustainable development, transport, energy, etc.

The construction sector is a very important sector of the global economy. Indeed, it represents nearly 11% of the world's GDP. The G8 countries represent more than half of the GDP and more than three quarters of the sector's total exports.

Construction is also a sector in which companies are very involved. Indeed, they employ more than 20% of the active workforce in France, ie 1,5 million people. France is one of the main producing countries in the European Union.

Furthermore, construction is a very important sector for SMEs because they represent more than 90% of companies in the sector and more than 50% of the workforce.

What are the types of construction contracts?

1. Package contracts

The amount is fixed in these contracts. The amount for the whole project is decided in the initial stages. This is a very common type of contract.

Benefits :

• It's easy for owners to close their deal all at once.
• It is also reliable for the entrepreneur because he knows the exact amount he will receive.
• Entrepreneurs can make a big profit in these contracts.

Disadvantages:

• It is difficult to estimate the price and fix it for the project – changes during the project disrupt things between the owner and the contractor.
• The contractor cannot make a mistake because he took the lump sum from the owner.

2. Time and material contracts

These types of contracts are on an hourly or daily basis, where the cost of all materials is separate from labor.

Advantage: 

• The owner should buy or buy the hardware separately to choose the one that suits him best.
• It's easy for contractors to bill on an hourly or daily basis. This keeps their level of motivation high.

Disadvantages:

• You must keep proper records of all materials brought in for construction.
• Even if you finish the project early, you won't get any incentive for it. Therefore, contractors sometimes delay the project to make their profit.

3. Unit price contracts

This type of contract is divided into different units. The contract estimates the price of each task separately instead of the entire project at once.

Benefits :

• The owner is clear on all project costs.
• If anything is included, later it will be considered a separate unit and charged accordingly.

Disadvantages:

• It becomes difficult for the owner to predict the cost of the whole project.

4. Cost-plus contracts

In cost-plus contracts, the customer must pay for all materials, labor, and other things as part of the work process. Along with this, the owner also has to pay the profit amount to the contractor. The profit is based on the percentage of the total project cost.

Advantage:

• These are flexible and the contractor knows they will be paid later if changes occur in the design.

Disadvantages:

• Sometimes it becomes difficult for the contractor to justify all the costs like travel, materials, etc.

Do I need a building contract?

Yes, it is mandatory to have a written account of all construction details. All rules, regulations and obligations are stated before the start of the project. The contract provides concrete proof of all the details discussed. It describes the relationship between the two parties.

The construction contract must be signed before any work is started. When work has started, all modifications and changes must be approved by all parties. It is for this reason that it is important to make a good contract, in order to avoid conflicts. Contract terms must be specific. A good contract reduces conflicts and disputes in the event of delays or problems.

It is important to specify the deadline for carrying out the work, under penalty of losing the right to turn against the builder. The builder must have the necessary permits and authorizations to carry out the project.

It is necessary that the builder has the necessary qualifications to carry out the construction.

The contract must provide for measures to ensure the safety of goods and people.

In the event of a dispute with the manufacturer

It is important to turn to a lawyer who is experienced in building and construction law to get the best possible result.

Lawyers have a wide range of techniques and strategies to resolve disputes.

Do not hesitate to consult a lawyer specializing in building and construction law, who has extensive litigation experience and who knows the law in the field of construction like the back of his hand.

The best lawyers take care of every detail when it comes to a dispute with a builder.

The manufacturer's obligations

The owner of a house that was built by a builder must be concerned with several obligations imposed by law. It is important to know these obligations and to ensure that they are respected.

Even though there are many contracts, there are always differences between them. In some cases, they may even be contradictory. Lawyers are familiar with these contracts and can help you interpret them. They will also be able to advise you on how to apply them.

Contracts can be vitally important when a dispute arises. They are decisive when the time comes to settle disputes through the courts or not. The role of lawyers is important, especially when it comes to a dispute concerning the construction of individual houses.

Important Terms

What should a construction contract contain?

To. Personal information

The information of the contractor and the client must be mentioned in the contract. Information includes name, address, contact details, etc. For the customer, the current address should be mentioned, and for an entrepreneur, the company address should be mentioned appropriately.

b. Project details

A clear title and description of the objective should be given. The exact place of construction should be mentioned and the specific area that needs to be built or improved. All minor details of each work must be written down.

vs. Project timeline

A client needs to know the schedule for the completion of his work. Therefore, it is crucial to design a proper schedule with all the necessary information for the project.

d. The estimated price

This part of the contract must be designed and completed. The actual cost for the whole project or project units should be mentioned along with the methods of payment. The payment term is also part of the contract.

e. Terms and conditions

All terms and conditions must be mentioned, including stop and pause clauses. With properly quoted clauses, the owner or client can easily claim if there seems to be a problem while the project is proceeding.

f. Guarantee

To trust a contractor, a client needs a guarantee for this. A contractor should provide a warranty for a few specific years so that if something happens the customer can easily claim it.

g. Date and signature