ESSENTIAL TERMS TO INCLUDE IN YOUR BUILDING CONTRACT

The parties State who you are and who the builder is. In past conflicts, sometimes one participant in a contract has used the fact that they’ve been wrongly described to avoid their liabilities.

Identification of the works This is a brief summary of the location of your project and scope of the job. It is particularly important if you ask the contractor to take on additional tasks later, such as landscaping, that are separate from the initial contract.

Contract documents It is essential to state the specific drawings, by number and revision letter, as well as the version of the specification. These might be different from the original tender documents if there have been alterations to the price since original quotes were received.

Contract administrator If you’re using an architect to manage the contract on your behalf, this will be the designer’s role. The agreement must make clear what powers they have.

The contract sum This needs to tie in directly with the associated documents and must reflect any post-tender changes.

Project duration & liquidated damages The terms should clearly state the dates when work should start and finish. It is useful to include a clause that specifies that any unwarranted delays will give you the right to make deductions from money due to the builder. This is usually a set amount for each week, called liquidated damages.

Payment terms Contractors are usually paid monthly, every four weeks or at specific stages in the job; for instance, when damp proof course level is reached, first floor joists in, weathertight etc. A certain amount, usually 5% should be held back until completion. Once finished, this can be reduced to 2.5% until three, six or 12 months after the project.

Variations These are items of the work that are omitted, changed or added after the agreement has been signed.

Insurance The builder must have adequate cover for public liability, fire and theft. This may not extend to items that belong exclusively to you and are stored on site, unless you specifically ask for it.

Solving disputes There should be a description of what parties can do if there’s a disagreement, plus what happens if it can’t be settled amicably.