However, in the construction industry, there are 5 types of contracts that are frequently used. This is known as the “ freedom of contract.” This means the parties are free to agree to essentially any terms they want, obviously, with some limitations. Read more: Construction Contract Documents | A Guide to Common Contract PartsĬontracts can be drafted in a number of different ways.This can include things such as any drawings or specifications, a schedule of values, a bill of quantities, any special conditions, and a full project schedule There may be a number of other documents that can be attached or otherwise incorporated by the language. In addition to the project info, the contract should clearly explain the rights and responsibilities of all parties such as payment application process, identify any retainage being withheld, how change orders are processed, notice provisions, etc.įurthermore, a construction contract isn’t solely one document. A well-drafted contract should include all of the general project information, such as the “ general conditions,” the parties involved, a general project timeline, a detailed scope of work, how substantial completion is defined, and more. However, there should be enough detail to give both parties a clear picture of their agreement. What to include in a construction contractĬonstruction contracts don’t need to be overly complicated documents. An owner will have a contract with a general contractor, a GC will then have a contract with a sub, a sub may have a contract with a material supplier, and so on down the chain. In the construction industry, one project can involve multiple different contracts. Legality (you can’t contract to break the law!).Legally speaking, only 4 things are needed to form a valid construction contract: Not much is needed to form a binding contract. At its core, a construction contract is simply an agreement between two or more parties to provide services in exchange for payment.

Construction line item cost breakdown