Building Contracts: What to Watch Out For

Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

Creating a successful building contract is an integral part of any major construction project, as it outlines the rights and obligations of all parties involved. This powerful document serves as a roadmap for the project to be completed on time and within budget. But crafting an effective building contract can be complex – so what should you look out for?

The first step is to ensure that everyone involved has a clear understanding of each other’s roles and responsibilities, as well as how disputes will be resolved. Having comprehensive payment terms is also essential; this should include allowances for unforeseen circumstances or delays, as well as provisions for late payments or non-payment.

When defining the scope of work that needs to be done, it is important to include a detailed description of the work itself, plus its timeline and budget. Finally, make sure that your building contract is legally binding - by having it reviewed and signed by qualified legal professionals before the project begins.

At Genie AI we understand how important having a well-drafted contract can be – which is why we provide free building contracts templates with our community template library. Our team are dedicated to helping you create an effective document without needing any specialist knowledge – giving everyone access to powerful legal documents with just a few clicks! Read on below for our step-by-step guide on how to use our template library today!

Definitions

Interviewing multiple contractors: The action of speaking with multiple potential contractors to ask questions about their experience, qualifications, and references.
Checking references: Investigating the past work of potential contractors by obtaining information from other clients.
Reading reviews: Examining what other people have said about a potential contractor’s work.
Setting an agreed-upon start and end date: Deciding on a start and finish time for the project that both parties agree to.
Specifying the materials and labor to be used: Clearly outlining the items and personnel that will be used during the project.
Establishing a payment plan: Developing a plan that outlines how and when payments will be made.
Setting a timeline for each stage of the project: Creating a schedule for each step of the project.
Establishing payment milestones: Setting dates by which payments should be made to ensure the project is progressing according to plan.
Discussing payment options: Considering which payment methods can be used for the project.
Obtaining necessary building permits: Making sure the proper permits have been acquired before the project starts.
Ensuring all contractors are properly licensed: Confirming that contractors have the necessary certifications to legally complete the project.
Understanding local zoning regulations and building codes: Being aware of the local laws and regulations regarding the construction.
Liability insurance: Coverage that protects a contractor from any legal action or financial loss that could be a result of the project.
Worker’s compensation insurance: Protection for both the contractor and the workers in case of an injury on the job.
Property damage insurance: Insurance that guards against damage to the property during the project.
Allocating a contingency budget: Allotting funds in case of unexpected costs or delays.
Planning for alternate solutions: Having a plan in place for what to do if something goes wrong.
Identifying potential sources of additional funding: Finding other ways to get money if the contingency budget is not enough.
Identifying all costs associated with the project: Discovering all the expenses associated with the project, including materials and labor.
Accounting for additional costs: Planning for extra costs, such as permits and materials.
Setting a limit on total project costs: Limiting the total cost of the project in the contract.
Understanding the terms of the contract: Being aware of the agreement between the parties.
Knowing when to involve an attorney: Determining when it is necessary to bring in legal representation to settle a dispute.
Seeking mediation when possible: Attempting to resolve disputes without taking legal action.
Establishing clear communication protocols: Setting up rules for how the parties will communicate.
Scheduling regular project updates: Planning meetings to monitor the progress of the project.
Documenting all communication: Recording all conversations to make sure everyone is on the same page.
Maintaining a project log or journal: Keeping a record of the project that documents any changes or updates.
Tracking all financial transactions: Monitoring all payments to ensure they are made on time.
Filing all paperwork and records in an organized manner: Storing all documents in a way that allows for easy access.

Contents

1. Researching and selecting the right contractor for the job
2. Interviewing multiple contractors
3. Checking references
4. Reading reviews
5. Writing a clear and thorough contract that outlines all responsibilities and expectations
6. Setting an agreed-upon start and end date
7. Specifying the materials and labor to be used
8. Establishing a payment plan
9. Establishing a payment plan and timeline for the project
10. Setting a timeline for each stage of the project
11. Establishing payment milestones
12. Discussing payment options
13. Ensuring all permits and licenses are in place before the start of the project
14. Obtaining necessary building permits
15. Ensuring all contractors are properly licensed
16. Understanding local zoning regulations and building codes
17. Understanding the various types of insurance needed for the job
18. Liability insurance
19. Worker’s compensation insurance
20. Property damage insurance
21. Preparing for potential construction delays and budget overruns
22. Allocating a contingency budget
23. Planning for alternate solutions
24. Identifying potential sources of additional funding
25. Working with the contractor to develop a realistic budget
26. Identifying all costs associated with the project
27. Accounting for additional costs (e.g. permits, materials, etc.)
28. Setting a limit on total project costs
29. Knowing your rights and responsibilities when it comes to resolving disputes
30. Understanding the terms of the contract
31. Knowing when to involve an attorney
32. Seeking mediation when possible
33. Keeping an open line of communication with all parties involved in the project
34. Establishing clear communication protocols
35. Scheduling regular project updates
36. Documenting all communication
37. Ensuring that all relevant documents and records are kept up-to-date throughout the project
38. Maintaining a project log or journal
39. Tracking all financial transactions
40. Filing all paperwork and records in an organized manner

Get started

Researching and selecting the right contractor for the job

• Compare the experience and qualifications of different contractors
• Read customer reviews and ratings
• Make sure the contractor is insured and licensed
• Check that the contractor specializes in the type of work you need
• Ask for and contact references
• When you have selected the contractor you want, you can move on to the next step.

Interviewing multiple contractors

• Prepare a list of questions to ask potential contractors
• Create a list of criteria to compare contractors against
• Schedule interviews with each contractor
• Ask questions to evaluate each contractor’s experience, skills, and availability
• Ask for quotes and compare prices
• Ask for references and contact them
• Evaluate the contractor’s overall professionalism and attitude
• Make sure you have a good rapport with the contractor
• When you have identified the best contractor, you can check this step off your list and move on to the next step of checking references.

Checking references

• Contact previous clients of the contractor to verify the quality of their work
• Ask the contractor for a list of references and contact information
• Ask the references about the contractor’s work ethic, pricing, and level of communication
• Ask what the contractor did well and what could have been improved
• Make sure the references are not related to the contractor or have any other conflicts of interest
• When you feel confident about the contractor’s references, you can move on to the next step.

Reading reviews

• Read online reviews, customer testimonials, and ratings from previous customers
• Speak to the contractor directly and ask for references from past customers
• Ask questions about the contractor’s experience, customer service, and quality of work
• Ask for proof of insurance and certifications
• Once you have gathered enough reviews, you can make an informed decision about whether the contractor is right for the job
• You can also use the reviews to negotiate with the contractor to get the best deal
• Once you are satisfied with the reviews, you can move on to the next step in building contracts: writing a clear and thorough contract that outlines all responsibilities and expectations.

Writing a clear and thorough contract that outlines all responsibilities and expectations

• Have a clear and concise introduction that states the name of the parties involved, the effective date of the agreement and the purpose of the agreement.
• Set out the services to be provided, including the specific tasks, timelines and any deliverables, in detail.
• Include any legal requirements that must be met.
• Define the payment terms, including payment dates, the method of payment, and any applicable late fees and interest.
• Specify any additional rights and obligations that either party may have and any warranties or disclaimers.
• Include a confidentiality clause if applicable.
• Make sure to include a dispute resolution clause so that any disagreements can be resolved in a fair and amicable manner.
• Include an assignment clause, which allows either party to assign the agreement to another party with the written consent of the other.
• Add a termination clause that defines how either party can end the agreement and the consequences of doing so.
• Include a governing law clause that specifies the laws that will govern the agreement.
• Have both parties sign and date the agreement.

How you’ll know when you can check this off your list and move on to the next step:
Once you have included all of the necessary information in the contract, reviewed it for accuracy and both parties have signed it, you can move on to the next step.

Setting an agreed-upon start and end date

• Identify a start and end date for the project
• Make sure that both parties agree to the dates and sign off on them
• Include a clause in the contract that outlines penalties for late completion
• Consider adding a clause that outlines the agreed-upon date for payment if the project is completed on time
• Make sure to include a clause that allows for extensions in the event of an unforeseen delay
• Once both parties have agreed to the start and end dates, ensure that they are included in the contract and that both parties sign off on them
• You can check this step off your list once the start and end dates have been agreed upon and both parties have signed off on them in the contract.

Specifying the materials and labor to be used

• Clearly define all materials and labor needed to complete the project in the contract.
• Create a list of all materials and labor needed, including estimated costs and a timeline for completion.
• Include a description of the quality of materials and labor expected.
• Get approval on the list of materials and labor needed before starting the project.
• Make sure this list is as detailed as possible, to help avoid any misunderstandings.

Once you have agreements on the list of materials and labor needed, you can check this step off your list and move on to the next step.

Establishing a payment plan

• Determine the payment plan that works best for you and the contractor.
• Consider the length of the project and the amount of money it will cost.
• Discuss payment milestones and ensure that both parties agree on the timeline.
• Decide whether payments will be made in installments or when the project is completed.
• Ensure that any payment plans are written into the contract.
• Make sure that both parties are clear on late payment fees and other penalties.
• Record the payment plan and timeline in the contract and have both parties sign it.

How you’ll know when you can check this off your list and move on to the next step:

• Once you have discussed and agreed upon the payment plan and timeline and it is written into the contract, then you can move on to the next step.

Establishing a payment plan and timeline for the project

• Negotiate the payment plan with the contractor, taking into account the total cost of the project and how much you can afford to pay for each stage of the project
• Reach an agreement on the payment plan that is suitable for both you and the contractor
• Set a timeline for each stage of the project, outlining when payments are due and when work should be completed
• Discuss any penalties that may be incurred if the contractor fails to meet the timeline and payment schedule
• Document the timeline and payment schedule in the contract and make sure that both parties sign and date the agreement
• Once the payment plan and timeline are set, you can check this off your list and move on to the next step.

Setting a timeline for each stage of the project

• Break down the project into stages such as design, development, and testing
• Establish a timeline for each stage, such as when it should start and when it should be completed
• Make sure to include a buffer of time in case of any delays
• Consider adding deadlines and milestones throughout to ensure progress is being made
• Have both parties sign off on the timeline and milestones
• Check the timeline periodically to ensure it is being followed
• Once all the stages and milestones have been completed, the project can be marked as complete
• Make sure to document any changes or delays in the timeline, and both parties agree to the new timeline

Establishing payment milestones

• Decide on the payment milestones that have to be met during the course of the project
• Consider whether there should be any additional payments in addition to the initial payment when the contract is signed
• Set an amount for each payment milestone and include details of when it is due in the contract
• Make sure that payment milestones are clearly agreed upon, such as after a certain number of hours or weeks of work are completed
• Include a clause that states that payment is only due when the milestone is met and that any delays in payment will result in delay of the project
• Make sure that payment milestones are realistic and achievable for both parties
• How you’ll know when you can check this off your list and move on to the next step: When you have established the payment milestones, specified the amount of each payment, and included details of when it is due in the contract.

Discussing payment options

• Agree on the payment terms, including when payments are due, when progress payments are made, and when the final payment is due
• Make sure you have a written agreement of the payment terms
• Decide on a payment method - cash, cheque, bank transfer, etc.
• Discuss any possible deductions from payments, such as late payment fees
• Make sure you have a way to track progress payments and any deductions
• Once all payment terms are agreed upon and a payment method is selected, you can check this off your list and move on to the next step.

Ensuring all permits and licenses are in place before the start of the project

• Obtain all necessary permits and licenses for the project from the local government
• Ensure that all permits and licenses are approved and in place before construction begins
• Consult with your local building and safety department to make sure you have all of the appropriate permits and licenses
• Check with your lawyer to make sure that all the necessary paperwork is in order
• Make sure that all of the necessary paperwork is filed and approved before the start of the project
• Once all of the permits and licenses are in place, you will be able to proceed with the project

Obtaining necessary building permits

• Understand the necessary permits and licenses needed for your project
• Check with local zoning and building departments to determine any additional requirements
• Obtain the necessary building permits from the local building department
• Make sure that the contractors you hire are able to obtain the permits
• Pay any fees associated with the permits
• Once all the permits are obtained, you can move on to the next step.

Ensuring all contractors are properly licensed

• Contact the local licensing board in your area and ask if the contractor has the proper license and if it is up-to-date
• Check the contractor’s references to ensure he is trustworthy and has the experience necessary to do the job
• Verify that the contractor’s insurance is current and adequate
• Make sure the contractor agrees to follow all local building codes and any applicable state laws
• When all of these requirements are met, you’ll know that you can move on the next step of understanding local zoning regulations and building codes.

Understanding local zoning regulations and building codes

• Research applicable zoning laws and building codes in the area where your project will take place
• Verify that all contractors are familiar with and abide by the local zoning laws and building codes
• Make sure contractors have the necessary permits and certifications for the project
• Double check that the project doesn’t violate any local zoning laws
• Determine if any special inspections or certifications are necessary for the project

Once you have researched and verified that all contractors are familiar with and abide by the local zoning laws and building codes and that all permits and certifications are in place, you can check this off your list and move on to the next step.

Understanding the various types of insurance needed for the job

• Research the types of insurance typically required for a building contract, such as workers’ compensation, property damage, and public liability insurance.
• Consult an insurance broker or agent to get a better understanding of the types of insurance available and how much they will cost.
• Compare quotes from different insurers to find the best deal.
• Get written confirmation of the insurance policy and coverage you have chosen.
• When you have all the necessary insurance coverage, you can move on to the next step.

Liability insurance

• Research the type of liability insurance you need for your project, such as general liability and project-specific liability
• Contact your insurance provider to find out what types of coverage they offer and what the costs are
• Determine the limits of liability that you will need for your project
• Purchase the insurance policy that best fits the needs of your project
• Make sure the policy covers all the liabilities you need
• Keep the policy with the contract, or keep a copy of the policy in your records
• Once you have purchased the necessary liability insurance, you can check this step off your list and move on to the next step.

Worker’s compensation insurance

• Understand the legal requirements for worker’s compensation insurance in your state.
• Research the different types of worker’s compensation insurance available, and decide which type is right for your business.
• Understand the coverage limits of the worker’s compensation insurance you’ll be purchasing.
• Get quotes from different insurers and compare the different coverage options.
• Purchase a policy that provides the coverage you need at a price you can afford.
• Make sure to have the policy reviewed by a lawyer to ensure that it meets all legal requirements.
• Have the contractor sign a document confirming that they have the required worker’s compensation insurance in place.

You will know you can check this step off your list and move on to the next step when:

• You have researched and purchased a worker’s compensation insurance policy that meets all legal requirements.
• You have had the policy reviewed by a lawyer.
• You have the contractor sign a document confirming that they have the required worker’s compensation insurance in place.

Property damage insurance

• Ensure that the contractor holds the proper property damage insurance, which should cover any damage to the property due to their work
• This should include any damage to the property, both inside and out
• Verify that the coverage is up to date and that the amount of coverage is adequate
• Ask for proof of insurance and make sure the contractor provides it before any work begins
• Once you’ve verified that the contractor has the necessary property damage insurance, you can check this off your list and move on to preparing for potential construction delays and budget overruns.

Preparing for potential construction delays and budget overruns

• Research local contractors and review their project timelines and budgets
• Research the local building codes, zoning laws, and other legal requirements
• Assess the construction site to identify potential issues that could cause delays or budget overruns
• Create a plan for addressing any potential issues
• Have a backup plan for labor and material shortages
• Have a plan for dealing with any unexpected weather delays
• Estimate the total time and cost of the project
• Keep track of every change in plans or materials
• Have a plan for dealing with added costs or unexpected delays

You can check off this step when you have completed all of the research and have a plan for each potential issue.

Allocating a contingency budget

• Calculate the budget for the entire project and then allocate a portion of it to the contingency budget.
• Make sure you are aware of all the potential problems that could arise and plan for them in the contingency budget.
• Include a line item for each potential problem and assign a dollar value to that item.
• Ensure that the contingency budget is included in the overall budget and that it is approved by all parties involved.
• When the contingency budget is approved, you can move on to the next step in the process.

Planning for alternate solutions

• Brainstorm potential solutions to any issues that could arise during the building contract
• Discuss all possible solutions with the other party and come to an agreement
• Document the accepted solutions and make sure both parties are in agreement
• When both parties agree to a set of solutions, you are ready to move on to the next step of allocating a contingency budget.

Identifying potential sources of additional funding

• Research available grants and other sources of free money that may be available to help with the contract project
• Ask the contractor if they are aware of any additional sources of funding that may be available
• Identify any other organizations or individuals who may be interested in contributing financially to the contract project
• Check with local, state, and federal sources for funding opportunities
• When you’ve identified all potential sources of additional funding, check them off your list and move on to the next step.

Working with the contractor to develop a realistic budget

• Review the contractor’s project budget, including all labor and material costs
• Negotiate with the contractor to ensure all costs are reasonable and necessary
• Make any necessary adjustments to the budget to ensure it is realistic
• Secure any additional funding sources as needed
• Request regular project updates from the contractor to ensure the budget is being adhered to
• Once you have agreed on a budget and all funding sources have been secured, you can check off this step and move on to the next.

Identifying all costs associated with the project

• Research the labor and material costs associated with the project
• Reach out to all potential contractors for a detailed cost breakdown
• Make sure to include the cost of any permits, inspections, or other additional services
• Ensure that all costs are included in the contract
• Evaluate the final cost of the project and confirm that it is within your budget
• Check off this step once you have a full understanding of all the costs associated with the project.

Accounting for additional costs (e.g. permits, materials, etc.)

• In order to accurately account for additional costs, you should research any local laws, permits, and regulations that may apply to your project.
• Make sure to factor in the costs of any materials you may need to purchase for the project.
• It’s also important to consider any other costs that may arise during the course of the project.
• Once you’ve done your research and accounted for any additional costs, you can check this off your list and move on to the next step.

Setting a limit on total project costs

• Make sure all parties agree on a maximum price for the project
• Estimate the total cost of the project, taking into account any additional costs such as permits, materials, labor, etc.
• Confirm that the client understands that the total cost of the project may exceed the maximum price
• Put the maximum price and any additional costs into the contract
• Make sure any contingencies for cost overruns are clearly laid out
• When all parties agree on the final cost of the project and sign the contract, you can check this step off your list.

Knowing your rights and responsibilities when it comes to resolving disputes

• Learn about the legal process for resolving disputes, including the availability of arbitration and litigation
• Research the applicable state and federal laws and regulations
• Familiarize yourself with the parties’ rights and responsibilities as spelled out in the contract
• Understand any limitations of liability or remedies that may be specified
• Identify the dispute resolution procedures outlined in the contract
• Determine the appropriate venue for resolving disputes
• When you’ve done all of the above, you can move on to the next step of understanding the terms of the contract.

Understanding the terms of the contract

• Read through the contract carefully and make sure you understand each term and its implications
• Ask the other party to explain any terms you don’t understand
• Make sure the contract is clear and concise, and that any language or terminology is not too vague
• Ensure that the contract covers all the necessary elements of the agreement
• Verify that any contingencies, deadlines, and payment terms are clearly stated
• Make sure all parties have signed the contract
• Check that the contract is in compliance with relevant laws and regulations
• Once you have verified all of the above, the contract is ready to be executed.

Knowing when to involve an attorney

• Speak to your attorney about the best way to draft, review and negotiate contracts
• Make sure that you and your attorney are in agreement about the terms of the contract
• Have your attorney review any proposed contract changes or additions to ensure that you are protected
• Ensure that the language used in the contract is clear and concise
• Have the attorney explain any legal terms or potential risks associated with the contract
• Have the attorney provide a written opinion on the enforceability of the contract

Once you have spoken to your attorney and you are both in agreement about the terms of the contract and any potential risks, you can be confident that you have completed this step.

Seeking mediation when possible

• Understand the importance of finding a mediator who has experience and is comfortable with the legal language used in a contract
• Research potential mediators to find one with the right credentials, experience, and expertise
• Contact the mediator to discuss the nature of the dispute and their fee structure
• Schedule a time to meet and discuss the dispute, the terms of the contract, and the details of the mediation
• Prepare any documents that may be necessary for the mediation sessions
• Attend the mediation session and work towards a resolution
• Once a resolution is reached, sign the mediation agreement to ensure that all parties are held accountable
• You will know when you can move on to the next step when you have a signed mediation agreement and all parties have acknowledged and agreed to the terms of the agreement.

Keeping an open line of communication with all parties involved in the project

• Have regular meetings with all parties throughout the contract process to ensure everyone is on the same page.
• Make sure everyone is clear on the scope of the project, the timeline, and the expected deliverables.
• Discuss any potential conflicts or issues that may arise and agree on how to resolve them.
• Make sure everyone involved has access to the necessary resources to complete the project.
• When possible, try to resolve any issues through direct communication rather than involving lawyers or courts.

Once all parties have agreed on the terms of the contract, this step can be considered complete.

Establishing clear communication protocols

• Identify which communication platform will be used (e.g. email, Skype, phone, etc.)
• Establish who will be the main contact person for communications
• Decide on a schedule for regular updates (e.g. weekly, bi-weekly, etc.)
• Set up an agenda for each meeting to ensure all topics are addressed
• Make sure that all communication is recorded and saved
• Once these protocols are in place, you can check this off your list and move on to the next step.

Scheduling regular project updates

• Schedule regular project updates with the client to keep them informed about progress and any potential risks or issues
• Set a timeline for when updates should be sent and determine the best method of communication (e.g. email, phone call, etc.)
• Make sure that all project updates are thorough and include any relevant details or changes
• When project updates are sent, ensure that the client responds with any feedback or information that is needed
• You can check this step off your list when you have established an agreed upon timeline for regular project updates and have determined the best method of communication.

Documenting all communication

• Ensure that all communication related to the project is logged and documented properly.
• This includes emails, phone calls, meetings, and other communication records.
• Make sure to keep track of all details, such as dates, times, names, and other relevant information.
• Document any changes to the project timeline and objectives in writing.
• Keep a record of any decisions that were made during meetings.
• You’ll know you can check this off your list and move on to the next step once all communication related to the project is properly documented.

Ensuring that all relevant documents and records are kept up-to-date throughout the project

• Keep track of all documents and records related to the project, including contracts, invoices, and any other relevant paperwork
• Set up a system that allows you to easily access and update all documents and records as needed
• Schedule regular checks to ensure that all documents and records are up-to-date
• Check and update documents and records after any changes are made to the project
• Make sure to keep copies of all documents and records
• When all documents and records related to the project are up-to-date, you can move on to the next step.

Maintaining a project log or journal

• Create a journal or project log to track all activity related to the contract
• Record all communication, events, and changes to the project
• Set aside time to update the journal at regular intervals
• Ensure that all relevant parties have access to the journal and are able to view any changes made
• Once the project is completed, review the journal for accuracy and completeness
• Check off this step when all relevant parties have access to the project log and it is up-to-date with all activities and changes.

Tracking all financial transactions

• Ensure that all financial transactions are recorded accurately and in a timely manner
• Track payments made and received
• Monitor all taxes, fees, and other costs related to the project
• Stay aware of deadlines, payment schedules, and any other financial requirements
• When all financial transactions are tracked and recorded properly, you can move on to the next step.

Filing all paperwork and records in an organized manner

• Create a filing system that is easy to understand and access when needed
• File all contracts, financial statements, and other relevant documents in this system
• Set up a system for electronic documents that is secure and accessible
• Make sure all documents are labeled correctly and filed in the right place
• Check that all documents are correctly filed in the system
• Know where to find documents when needed
• Have a backup system in place in case of a computer crash or data loss
• When all documents have been successfully filed, you can move on to the next step!

FAQ

Q: What are the key differences between UK, USA and EU building contracts?

Asked by Andrew on October 7th, 2022.
A: Building contracts in the UK, USA and EU all have certain common features, such as the inclusion of an agreement between two parties to undertake a particular building task. However, there are also some key differences that you need to be aware of when drafting a contract.

In the UK, contracts are typically governed by the law of England and Wales. This means that any disputes that arise will be resolved in accordance with English law. In the US, contracts are typically governed by state law. The exact laws that apply may vary from state to state.

In the EU, contracts are governed by a variety of different laws depending on which country the contract is being signed in. Generally speaking, EU law applies throughout the EU and all member states must abide by this law. However, some countries may have their own laws that apply in addition to EU law.

It is important to ensure that you understand the applicable laws in your jurisdiction before signing a contract. This will help ensure that you are protected in the event of a dispute and that your rights are protected under the applicable law.

Q: How can I ensure my building contract is legally binding?

Asked by Olivia on August 21st, 2022.
A: In order for a building contract to be legally binding it must satisfy certain requirements. First and foremost, it must be in writing and signed by both parties to the contract. It must also include essential elements such as an offer and acceptance, consideration (i.e., something of value given in exchange for something else) and terms that are enforceable in a court of law (such as payment terms).

The contract should also include provisions relating to termination of the contract in case of breach or default by either party. Finally, it should include an indemnity clause which serves as a protection for each party against any claims or losses arising from the performance of their obligations under the contract.

By ensuring that these requirements are met your building contract will be legally binding upon both parties and you will have recourse through the courts should there be a dispute or breach of your agreement.

Q: What additional clauses should I consider when drafting my building contract?

Asked by Noah on March 3rd, 2022.
A: When drafting a building contract there are a number of additional clauses which you may wish to consider depending on your particular circumstances and needs. For example, you may wish to include a clause relating to payment terms such as payment milestones or late payment fees; or you may want to include provisions relating to confidential information or intellectual property rights; or provisions relating to insurance cover; or provisions relating to dispute resolution processes such as arbitration or mediation; or provisions relating to warranties or guarantees; or provisions relating to termination of the contract; or provisions relating to force majeure (i.e., unexpected events outside of your control); or even provisions relating to liability for any losses suffered as a result of breach of contract by either party.

It is important to ensure that all relevant clauses are included in your building contract so that you have legal recourse should any dispute arise in relation to performance of your agreement or any other issue related thereto.

Q: How do I ensure my building contract covers all possible scenarios?

Asked by Emma on June 17th, 2022.
A: When drafting a building contract it is important to ensure that it covers all possible scenarios so that you can be sure that your rights will be protected in any eventuality. This means including clauses which cover situations such as breach of contract by either party; liability for any losses suffered as a result of breach; dispute resolution processes such as arbitration or mediation; force majeure (i.e., unexpected events outside of your control); termination of the contract; warranties/guarantees; payment terms; confidential information/intellectual property rights; insurance cover etc.

By including these provisions your building contract will provide comprehensive protection for both parties and reduce the risk of disputes arising from either party not fulfilling their obligations under the agreement.

Q: Is it advisable for me to use standard templates when drafting my building contract?

Asked by Liam on December 12th, 2022.
A: Standard templates can be an effective starting point when drafting a building contract but it is not advisable for you to rely solely on these templates without customising them according to your particular needs and circumstances. This is because standard templates do not always take into account all relevant factors such as industry-specific regulations, applicable laws in your jurisdiction etc., which could lead to disputes arising if these factors are not taken into account at the outset.

It is therefore advisable for you to consult with an experienced lawyer who can help customise standard templates according to your particular needs and circumstances so that your rights are adequately protected in any eventuality and disputes can be avoided where possible.

Example dispute

Suing a Contractor for Breach of Contract

• Plaintiff must prove the contractor breached the building contract by failing to complete the job in a timely manner, failing to use the specified materials, failing to abide by local building codes, or other breach of the contract.
• If a breach is proven, the plaintiff may be eligible for damages, including the cost of additional work needed to complete the job, cost of materials, and any additional costs incurred due to delays.
• The plaintiff may also be able to seek compensation for any losses or damages due to the contractor’s breach of contract.
• Settlement of the lawsuit may involve the contractor agreeing to complete the job in a timely manner, returning any monies paid for incomplete work, and paying for any additional costs or damages incurred by the plaintiff.
• Damages may be calculated by subtracting the amount the plaintiff would have paid if the contractor had abided by the contract from the amount the plaintiff actually paid.

Templates available (free to use)

Assignment Deed Construction Documents Building Contracts
Guide To Intermediate Building Contract
Guide To Jct Prime Cost Building Contract
Jct Intermediate Building Contract Schedule Of Amendments
Jct Management Building Contract
Jct Management Building Contract Guide
Jct Minor Works Building Contract Contractors Design
Jct Prime Cost Building Contract
Jct Standard Building Contract Amendments Schedule
Jct Standard Building Contract Guide
Jct Standard Building Contract Without Quantities
Second Notice Terminating Building Contractors Employment Under Jct Contract
Standard Building Contract Approximate Quantities
Standard Building Contract Estimated Quantities

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