Posted by Tim Sine in: Uncategorized

There are certain key aspects to a construction contract going over each party’s rights and duties. A construction contract should verify the contractor has the proper licenses and insurance. Owners should also be able to find information about the mechanic’s lien on their property if payment is not received. It is crucial that these contracts are very specific and well-defined so that each party is clear on expectations from the beginning to avoid discrepancies.

​Types of Construction Contracts

Not all construction contracts will look the same as there are a variety formats to fit personal preferences and project details. Contrast types include:

Fixed-price, or lump-sum

Providing a fixed price for the project as a whole which may include clauses for liquidated damages or penalties for late completion.


Includes costs of materials and labor. The “plus” could represent a fixed fee and guaranteed maximum price.

Time and material

Beneficial for projects with a level of uncertainty but the owner may pay hourly or daily, without the “plus” percentage. The contractor could include a guaranteed maximum price so the homeowner feels at peace about the total cost.


Commonly used for bidding, allowing owners to know that the contractor is charging a standard amount without a markup for anything extra that the project ends up needing.

The Contract Components

There are fundamental provisions of a general contractor construction agreement, consisting of the following information and clauses:

Name and contact information

This should include the contractor’s license number, phone number, email address, and company address. The homeowners name, phone number, email address, address of the property where the project will be completed, and a verification of ownership (which can be done by a county search) should be included as well.

Property description

The property should be described in legal terms. Use the property description in the deed from the county clerk’s record. Blueprints and any other specifications required for the job should be listed out.

The cost

The final project cost should be provided and how payment will be handled, such as by several installments or down payment. An installment payment agreement should have a list of what is required on specific dates. Describe how the contract can be terminated if the homeowner is not able to obtain financing.

Project details

The work should be described as well as a set completion date so that everyone is on the same page. This clause should be thorough about what is being constructed and when it can be expected.

Project Issues

A “stop-work” clause protects the contractors if they are not getting paid and explains how both parties can terminate the contract. The contract should also include when the homeowner has the right to withhold payment if workmanship is not up to par. Either side can rightfully sue for breach of contract, so be sure to go over what can trigger a lawsuit. List what will take place if there are unexpected circumstances or natural events, such as a flood, and include an agreement for damages due to late performance or unforeseen problems. Be sure that you obtain proper licenses and secure liability insurance so you are protected in the event of claim.

Social title: The Main components to a Construction Contact

Social description: There are key elements that every construction contract should have. Review these top provisions.