Essential Steps for Drafting a General Contractor Contract

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Creating a general contractor contract is an essential step for any contractor and customer. It serves to protect the interests of both parties, setting out duties, liabilities and responsibilities in a clear and concise manner. Tailoring the contract to suit the needs of each individual customer also helps ensure that their expectations are met and that they receive the services they have paid for.

Not just that, drafting a well-crafted general contractor contract can also help safeguard contractors against unexpected costs or mistakes made by customers. A good contract should explicitly define the scope of services provided by the contractor as well as any payment arrangements or dispute resolution processes. Doing so can provide contractors with greater peace of mind when embarking on work with customers.

The Genie AI team understands this all too well; that’s why we’ve created an extensive community template library filled with millions of data points showing what market-standard general contractor contracts look like. With our free templates, anyone can draft high quality documents without needing to pay for legal advice - giving both sides confidence in their agreement before any work begins.

To make sure you create a comprehensive and legally binding document that meets all your needs, follow our step-by-step guide below:
• Understand your customer’s requirements - take time to understand what they need from you and define it clearly in your agreement
• Be aware of relevant laws - familiarise yourself with local regulations surrounding contracts so you can ensure compliance
• Define payment terms - outline exactly when payments will be due and how much will be paid
• Include liability provisions - detail who is responsible for damages or mistakes made during the project
• Provide dispute resolution options - specify how disputes should be handled including arbitration procedures if necessary

With these steps in mind, you’re ready to begin drafting your own general contractor contract! To access our template library today, click here [insert link].

Definitions (feel free to skip)

Stakeholders: Individuals or entities who have a vested interest in a project.
Scope of Work: A detailed description of the services to be provided, as well as any materials and equipment to be used.
Payment Schedule: The amount to be paid, when the payment is due, and the payment method.
Payment Methods: Any methods of payment that are acceptable, such as cash, check, or credit card.
Insurance Requirements: The type of insurance that the contractor is required to have, as well as any additional insurance that may be needed.
Exceptions of Liability: Any circumstances in which the contractor will not be held liable for any damages or losses.
Performance Expectations: The expected level of quality and quantity of work, as well as any relevant deadlines and standards that need to be met.
Consequences of Non-Performance: Any penalties or other consequences that may be incurred if the contractor fails to meet the performance expectations.
Termination Terms: Any conditions that need to be met in order for the contract to be terminated, as well as any notice period that needs to be given.
Dispute Resolution: Any procedures that need to be followed in the event of a dispute, such as arbitration or mediation.
Third-Party Resolution Services: Any third-party services that can be used to resolve disputes, such as a lawyer or mediator.
Industry Standards: Standard practices and terms for similar contracts in the same industry.
Point of Negotiation: Areas of the contract that are open to negotiation, such as payment terms or performance expectations.
Deadlocks: Situations where two parties are unable to reach an agreement.

Contents

• Overview of the project and scope of work
• Establish project goals
• Identify stakeholders
• Define scope of work
• Payment terms for the project
• Set payment schedule
• Outline payment methods
• Specify when payments are due
• Identify any special discounts or incentives
• Insurance and liability requirements
• Specify insurance requirements
• List any exceptions of liability
• Performance requirements
• Outline performance expectations
• Identify any consequences of non-performance
• Termination terms
• Define when and how the contract can be terminated
• Outline any termination fees
• Dispute resolution
• Establish how disputes will be handled
• Identify any third-party resolution services
• Finalizing the agreement
• Determine who will sign the agreement
• Outline any additional documentation that is needed
• Helpful tips for negotiating the terms of the contract
• Research the industry standards
• Identify a point of negotiation
• Establish what each party needs to agree to
• Determine how to resolve deadlocks
• Set an expiration date for the agreement
• Consider the long-term implications of the agreement
• Drafting the contract
• List all parties involved
• Summarize the terms of the agreement
• Ensure that all parties understand the terms of the contract
• Finalizing the contract
• Have each party sign the agreement
• Make sure that all parties have a copy of the agreement
• File the contract in a secure location

Get started

Overview of the project and scope of work

• Research the project and create a list of specific tasks and services to be completed
• Ask the contractor for a bid that outlines the specific tasks and services to be completed
• Review the contractor’s bid and negotiate any changes before signing the contract
• When you and the contractor have agreed on the project scope of work and the cost, you can move on to the next step.

Establish project goals

• Determine the scope of the project to be completed
• Identify the timeline for the project
• Set a budget for the project
• Determine the payment terms
• Set expectations for the quality of work
• Identify the scope of services to be provided
• Include any specific requirements or restrictions
• Outline the roles and responsibilities of each party

When you have completed the steps above, you can move on to the next step of identifying stakeholders.

Identify stakeholders

• Identify all stakeholders involved in the project, including the general contractor and the client
• Ask relevant questions to determine roles, responsibilities, payment agreements, and timeline
• Compile a list of all stakeholders and their contact information
• When you have a complete list of stakeholders, you can move on to the next step: defining the scope of work.

Define scope of work

• Identify the services that need to be performed and the timeline in which the services are to be completed
• Outline the responsibilities of each party and the expectations for the project
• Make sure the scope of work is detailed and specific enough to provide clarity and avoid any potential disputes
• Include any additional services or tasks, as well as any exclusions from the scope of work
• Have both parties agree on the scope of work and sign off on it
• Once both parties have agreed to and signed off on the scope of work, you can check this off your list and move onto the next step.

Payment terms for the project

• Decide the payment amount and payment schedule for the project
• Include details on how the contractor will be paid, i.e. lump sum payment or progress payments
• Specify any additional payments, such as bonuses or extra fees
• Include a payment schedule that outlines when payments are due
• Specify any late payment fees or interest that will be charged for late payments
• Include a clause that states that the contractor will not be paid until the work has been completed and accepted by the client
• Confirm that all payments will be made in the agreed upon currency
• Once these details have been agreed upon and included in the contract, you can check this step off your list and move on to the next step of setting the payment schedule.

Set payment schedule

• Decide on the payment schedule, including how often payments will be made and due dates
• Determine what constitutes completion of the job or phases of the job, so that payments can be tied to these milestones
• Include payment amounts and due dates in the contract
• Ensure that all parties agree and sign off on the payment schedule before the contract is finalized
• Once the payment schedule is agreed upon, the contract can be finalized and signed by all relevant parties.

Outline payment methods

• Determine the type of payment accepted (cash, check, credit card, etc.)
• Specify the amount and timing of payments
• State who is responsible for paying legal fees
• Include any applicable late fees
• Specify who will incur the cost of any applicable taxes
• Determine what constitutes a breach of contract

Once you have outlined all payment methods, you can check this off your list and move on to the next step.

Specify when payments are due

• Decide on the payment schedule that works best for both parties.
• Make sure to include dates and payment amounts.
• Ensure the payment schedule is written in the contract.
• You will know this step is complete when the payment schedule is written in the contract.

Identify any special discounts or incentives

• Consider any discounts or incentives you can offer your client for signing the contract.
• Make sure you list out any special discounts or incentives that are part of the agreement in the contract.
• Ensure that the amount, type, and duration of the incentive is included in the contract.
• You can also include a clause in the contract that states that the incentive offer can be revoked at any time.
• Check this off your list when you’ve included the details of any discounts or incentives in the contract.

Insurance and liability requirements

• Check with local and state laws to make sure the contractor meets all required insurance and liability requirements.
• Request to see a copy of the contractor’s insurance certificates and verify they are up to date.
• Ensure the contractor has workers compensation and general liability insurance.
• Determine if the contractor will need additional insurance to cover any special needs of the project.
• Include the insurance requirements in the contract and specify which party is responsible for obtaining it.
• Once all of the insurance requirements are in place, the step is complete and you can move on to the next step.

Specify insurance requirements

• Clearly state the types of insurance the GC must have to work on the project.
• Outline the limits and deductibles of liability insurance.
• Identify the conditions that must be met for the GC’s insurance to cover the project.
• Include a clause that indicates that the GC shall provide proof of insurance prior to the start of the project.
• Once the above points are included in the contract and proof of insurance is provided, you can check this off your list and move on to the next step.

List any exceptions of liability

• List any areas in which the contractor would not be liable in the contract
• Clarify which parties are responsible for any losses or costs incurred due to unforeseen events
• Spell out in clear language any limitations of liability
• Make sure to include a disclaimer that the contractor is not responsible for events outside of their control
• Once all the exceptions have been listed and agreed upon, check this off your list and move on to the next step: Performance requirements.

Performance requirements

• Identify the services that the general contractor is expected to provide in the contract.
• Describe the scope of the project, including any special requirements and/or materials that need to be used.
• Outline the timeline for completion of the project.
• Include any specific instructions for the general contractor to follow.
• Specify any milestones that need to be met during the project.
• Specify any inspections or certifications required during the project.

Once you have outlined the performance expectations in your contract, you can move on to the next step.

Outline performance expectations

• Identify the services the contractor will provide
• List the deadlines and milestones associated with the contract
• Define the quality standards that must be met
• Specify any special requirements, such as licensing, certifications, and insurance
• Describe the manner and frequency of payment to the contractor
• Define the method of dispute resolution
• Once all expectations and requirements have been outlined, the document should be reviewed for completeness and accuracy.

Once all expectations and requirements have been outlined and the document has been reviewed for accuracy, this step can be considered complete and the next step can be undertaken.

Identify any consequences of non-performance

• Carefully consider any potential consequences of non-performance that should be included in the contract
• Consult with a legal professional if you are unsure of any laws or regulations that may apply to the contract
• Include an appropriate clause for each consequence of non-performance in the contract
• Ensure that the consequences are clearly defined in the contract and are proportionate to the potential non-performance
• Check that each party is aware of and agrees to the consequences before signing the contract
• Once you have done all of the above, you can check this off your list and move on to the next step.

Termination terms

• Identify the conditions under which either party may terminate the contract
• Specify the time frame for terminating the contract
• Specify the notification period required before termination
• Include any penalties or damages that may arise as a result of terminating the contract
• Include any procedures for resolving disagreements or disputes
• Establish the obligations of the parties upon termination

Once you have drafted the termination terms of the contract, you can check this off your list and move on to the next step.

Define when and how the contract can be terminated

• Draft a clause that outlines the conditions under which the contract can be legally terminated.
• Specify the notice period that must be given by either party prior to terminating the contract.
• Assign responsibility for paying any applicable termination fees.
• Clarify who is responsible for any outstanding payments or liabilities if the contract is terminated prior to completion.
• Once the termination clause is drafted, review and revise it as needed.
• Check off this step once the clause is finalized and ready for inclusion in the contract.

Outline any termination fees

• Specify which party is responsible for paying the termination fees
• Set a limit on the maximum amount of the termination fees
• Identify who is responsible for covering other costs associated with contract termination, such as attorney’s fees
• Include any other necessary provisions relating to termination fees

You can check this off your list when you have a clear and detailed understanding of the termination fees, who is responsible for them, and any other provisions relating to them.

Dispute resolution

• Understand the type of dispute resolution clause needed, such as mediation or arbitration
• Determine the jurisdiction in which any dispute will be adjudicated
• Include how disputes will be resolved, such as using a third-party mediator
• Outline any costs associated with dispute resolution
• Include who will be responsible for paying any costs associated with dispute resolution
• Establish any timelines associated with dispute resolution

Once you have all the necessary information and have written out the dispute resolution clause in the contract, you can check this off your list and move on to the next step.

Establish how disputes will be handled

• Consider the use of an arbitration or mediation clause in the contract
• Decide which party will handle legal and/or financial disputes
• Determine which state’s laws will apply to the contract
• Include a clause for attorney fees in the event of a legal dispute
• Once these details have been established, the disputes resolution clause can be added to the contract
• Check off this step when you have included the disputes resolution clause in the contract.

Identify any third-party resolution services

• Research third-party resolution services and decide which best suits your needs
• Identify any state-specific requirements for third-party resolution services
• Make sure all parties involved are aware of and agree to the third-party resolution service you’ve chosen
• Include in the contract all relevant details for the third-party resolution service chosen
• When all parties have agreed to the third-party resolution service, you can move on to the next step.

Finalizing the agreement

• Get the agreement reviewed by a lawyer to ensure it meets all applicable laws and regulations.
• Make sure the agreement is complete and accurate, with all necessary information included.
• Have each party sign the agreement.
• Make sure to keep a copy of the contract for your records.

When you have completed these steps, you can check this off your list and move on to the next step.

Determine who will sign the agreement

• Identify all parties who will be involved in the agreement (client, contractor, subcontractors, etc.)
• Ensure that all parties are legally authorized to sign the agreement and represent the appropriate organization or entity
• Discuss and decide who will sign the agreement with all parties involved
• Obtain the necessary signatures on the agreement from all parties
• Keep a copy of the original signed agreement for your records
• Once all parties have signed the agreement, you have successfully determined who will sign the agreement and can move on to the next step.

Outline any additional documentation that is needed

• Research what additional documentation might be needed to supplement the contract, such as permits, licenses, or insurance proof.
• Check with the local authorities to determine what paperwork is required for the project.
• Identify any additional documentation required by law in order to complete the project.
• Make a list of any additional documents that are necessary for the project.
• Once you have identified all necessary documents, check them off the list to ensure they are ready to be included in the contract.

Helpful tips for negotiating the terms of the contract

• List down all the terms and conditions that need to be agreed upon by both parties
• Have a comprehensive list of all the work to be done and its associated costs
• Clearly define the roles, responsibilities and expectations of each party
• Include any additional services that may be required beyond the scope of the initial contract
• Incorporate a dispute resolution process in the event that a dispute arises
• Set a deadline for when the contract needs to be signed by both parties
• Make sure that all of the terms and conditions are understood by both parties before the contract is signed
• Check that the contract is legally binding and valid in your jurisdiction

Once these tips are followed, you can check this step off your list and move onto the next step.

Research the industry standards

• Read online industry publications and websites to get an idea of what a typical contract looks like
• Research the laws and regulations in the jurisdiction where the contract will be executed to make sure the contract is compliant
• Research settlement and dispute mechanisms to include in the contract
• Talk to industry professionals and colleagues to get a better understanding of the industry
• When you have a good understanding of the industry standards, you can check this off your list and move on to the next step.

Identify a point of negotiation

• Determine the scope of work: What services will be provided, what is the timeline, and what is the budget?
• Discuss expectations of the parties: Who is responsible for paying for materials and labor, and what is the payment schedule?
• Note any non-standard terms that may be required by the parties: How will disputes be handled, and who will be liable for any damages?
• Agree on a termination clause: How will the contract be ended and what will be the consequences?
• When you have identified the points of negotiation and agreed on the terms, you can move on to the next step.

Establish what each party needs to agree to

• Make a list of all the terms and conditions that you expect each party to agree to.
• Make sure that each party has the same understanding of the terms and conditions.
• Identify any areas that the parties are likely to disagree on and consider how to address those points.
• Incorporate those points into the contract in a way that is fair to both parties.

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

• When you have a clear understanding of the points that each party needs to agree to and those points have been incorporated into the contract.

Determine how to resolve deadlocks

• Consider the advantages and disadvantages of mediation, arbitration and litigation when determining how to resolve any deadlocks during the drafting process
• Decide on the best course of action for resolving deadlocks that may arise during the drafting process
• Include a clause in the agreement that outlines the process for resolving deadlocks, including the method of resolution, the timeline for resolution, and the specifics for appointing a mediator, arbitrator, or other neutral third-party
• How you’ll know when you can check this off your list: When you’ve determined the best method of resolution, included the details in the contract, and both parties agree to the clause.

Set an expiration date for the agreement

• Establish the length of time the agreement will be in effect.
• Consider how long the project will take, and how much time is needed for any related paperwork.
• Agree on a date when the agreement will expire.
• Include the expiration date in the contract and ensure both parties sign and date the document.
• You will know when you can check this off your list and move on to the next step once both parties have signed and dated the document with the expiration date included.

Consider the long-term implications of the agreement

• Think about the length of time that the agreement should be in effect
• Consider the possibility of renewal or extension of the contract
• Determine what will happen if either party breaches the contract
• Think about any potential consequences or liabilities that may arise from the contract
• Decide if any additional clauses or provisions should be included in the contract
• When you have considered all of these points, you can move on to the next step of drafting the contract.

Drafting the contract

• Draft the contract using legal terminology that is clear and concise
• Include all relevant details such as terms, conditions, payment arrangements, and the scope of the project
• Include a termination clause, if applicable
• Include a dispute resolution clause, if applicable
• Include a confidentiality clause, if applicable
• Include a severability clause, if applicable
• Proofread and edit the contract to make sure all terms are correct
• When the contract is finalized, have all parties involved sign it
• Retain a copy of the contract for your records

You’ll know you can move on to the next step when all parties have signed the contract and you have a copy of the finalized agreement.

List all parties involved

• Identify the parties involved in the contract. This could include the general contractor, the client, and any subcontractors.
• Write down the full legal names and addresses of each party.
• When you have written down each party’s name and address, you have completed this step and can move on to the next step.

Summarize the terms of the agreement

• Review the list of parties and the terms laid out in the contract
• Create a summary of each party’s responsibilities, obligations, and rights
• Ensure that the summary accurately reflects the intent of the parties
• Make sure that the summary is short and easy to understand
• Include the most important terms and conditions of the contract
• Double-check that all parties agree with the summary
• Once all parties have agreed to the summary, the step is complete and you can move on to the next step

Ensure that all parties understand the terms of the contract

• Ask questions to make sure each party understands their role and the scope of the work.
• Make sure that each party is aware of the progress payment terms, the timeline, and any relevant deadlines.
• Verify that all parties have read, understand, and agree with the contract terms.
• Have each party sign and date the contract.
• Make sure that each party keeps a copy of the contract for their records.

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

• When all parties have read, understood, and agreed to the terms of the contract and have signed and dated the contract.

Finalizing the contract

• Review the contract details with both parties to check that there are no omissions or discrepancies
• Ask both parties to sign the contract
• Make sure each party keeps a signed copy of the contract
• Once both parties have signed the contract, it is legally binding
• You can check this step off your list and move on to having each party sign the agreement.

Have each party sign the agreement

• Make sure all parties involved are available to sign the agreement
• Have all parties read through the contract and make sure they understand the terms and conditions
• Provide all parties with a copy of the contract to sign
• Collect the signed copies of the contract
• Make sure all parties have their signed copies of the contract
• Once all parties have signed the contract, the agreement is legally binding
• You can check this step off your list once you have all the signed copies of the contract.

Make sure that all parties have a copy of the agreement

• Make sure that all parties have a copy of the agreement. This includes all contractors, clients, and any other parties involved in the contract.
• Send the agreement via email to all parties for their records.
• Make sure that all parties have received a copy and have read and understood the terms and conditions of the agreement.
• Once all parties have confirmed they have a copy of the agreement, you can check this step off your list and move on to the next step.

File the contract in a secure location

• Make sure the contract is signed by all parties
• Create a digital and/or hard copy of the contract and store it in a secure location
• Ensure that all parties have access to the contract and that it is not altered in any way
• You will know you have completed this step when you have securely stored the contract and all parties have access to it.

FAQ:

Q: What are the differences between a UK and an USA contractor contract?

Asked by John on April 5th 2022.
A: Generally speaking, UK and USA contractor contracts differ in terms of their legal requirements, as each country has its own laws governing contracts. In the UK, the terms and conditions of the contract must be in writing and must be signed by both parties in order to be legally binding. In the USA, on the other hand, a contract can be legally binding without being in writing or signed. Additionally, the UK has a more extensive body of contract law than the USA, including laws that govern termination of a contract and breach of contract.

Q: What are the essential steps for drafting a general contractor contract if I’m dealing with customers from both EU and USA?

Asked by Isabella on May 12th 2022.
A: Preparing a general contractor contract for customers from both EU and USA requires particular attention to detail, as there are certain differences in laws between the two jurisdictions which could have an effect on the nature of the contract. When drafting such a contract, it is important to consider both EU and US laws, including any differences in terms of liability, dispute resolution processes and other legal provisions. Additionally, it is wise to ensure that all relevant parties understand their obligations and rights under the contract and that any clause which might be ambiguous is clarified with legal advice.

Q: How do I ensure that my general contractor agreement is suitable for my particular industry?

Asked by Noah on August 16th 2022.
A: It is important to ensure that your general contractor agreement is tailored to your particular industry in order to protect your rights and interests as well as those of your customers. For example, if you are offering services in a technology sector then you may require additional clauses related to data protection or intellectual property rights. Additionally, if you are offering services in a business-to-business (B2B) sector then you may need to include provisions for payment and dispute resolution processes relevant to this type of transaction. It is therefore important to consider all aspects of your industry when drafting a general contractor agreement.

Q: What should I consider when deciding whether I need a general contractor contract?

Asked by Abigail on October 4th 2022.
A: Deciding whether or not you need a general contractor agreement will depend on several factors such as the nature of your business or project, the risks involved and any legal requirements which may apply (e.g. data protection or intellectual property). It is important to consider all aspects before deciding whether or not you need an agreement; for example, if you are engaging with customers then you may need an agreement in order to protect yourself from potential disputes or liabilities arising from their use of your services. Additionally, if you are providing services with long-term implications then it is wise to have an agreement which details all relevant obligations and responsibilities between parties.

Example dispute

Lawsuits Referencing General Contractor Contracts

• The plaintiff must show that the general contractor breached their contract by failing to complete the job according to the agreed upon terms.
• If a breach is found, the plaintiff can seek damages for the cost of the work that was not completed, any additional costs incurred in order to complete the job, and any other losses related to the contract breach.
• The plaintiff and defendant can also seek to settle the lawsuit through mediation or arbitration, or they can take the case to court.
• If the case goes to court, the court will review the evidence to determine if the contract was breached and if there is a valid claim for damages. The court will then assess the damages based on the evidence presented.
• In some cases, the plaintiff may be awarded punitive damages, which are meant to punish the defendant for their actions and deter similar behavior in the future.

Templates available (free to use)

General Contractor Contract

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