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The Construction Contract: Clauses to Insist On

Most construction disputes are not technical. They are about scope and payments, and both are settled — or lost — in the contract, months before anyone argues.

Scope, defined by documents rather than adjectives

The contract must attach the line-item budget, the drawings and the specifications, each identified by date and version. "A house of approximately 200 m² to a high standard" is not a scope; it is an invitation to a disagreement. Everything the owner assumes is included and is not written down will be an extra, and it will be an extra at a moment when you have no leverage.

Payments tied to verified progress

Payments should follow milestones that can be inspected — foundation complete, structure and slabs, services closed, finishes, handover — not calendar dates. Any advance should amortise proportionally across each payment rather than sitting outstanding until the end. Hold a retention until the punch list is cleared. For an owner abroad, this structure protects more than any amount of supervision does.

Change orders, priced before execution

Every change, whether you asked for it or the site forced it, must be documented before it is executed, with its cost and its effect on the schedule. Without that mechanism a project advances on verbal agreements and produces a final invoice nobody recognises. With it, the final number is explainable line by line — which is the entire point.

ItemSound practiceWarning sign
Advance paymentAmortised across each paymentLarge advance, never amortised
PaymentsTied to verified progressFixed calendar dates, no inspection
ChangesPriced and signed before executionVerbal agreements on site
CompletionDate plus defined extensionsNo completion date at all
WarrantyWritten, scoped, time-limited"Guaranteed" with no terms
TerminationSettlement method definedClause absent entirely

Time, penalties and legitimate extensions

Start date, completion date, and a defined list of what justifies an extension: extraordinary rain, owner-requested changes, authority delays outside the builder's control. Plus a delay penalty and its cap. A contract with no completion date is a contract that only protects one party, and it is not you.

Warranty, insurance and termination

A written warranty against hidden defects, with what it covers, for how long and how to report. Confirmation of the builder's civil liability and workers' cover, with current certificates. And termination clauses with how the settlement is calculated — for work executed and verified, materials on site, and any penalty. Nobody signs a contract expecting to use that clause, which is exactly why it gets left out.

Related pages: How to read a construction budget · Site supervision · Versión en español · Taking over a stalled project

Frequently Asked Questions

Scope with the line-item budget and dated drawings attached, milestone-based payments, a written change-order procedure, completion date with defined extensions, delay penalty, warranty against hidden defects, insurance, and termination terms.

Not for validity between the parties. What matters far more is that the annexes — budget, drawings, specifications — are identified and attached, because disputes are about scope, not about signatures.

Enough to cover mobilisation and initial materials, amortised proportionally across each subsequent payment. The percentage matters less than whether it is amortised and backed by verified progress.

The agreed penalty applies, except for extensions the contract defines as legitimate. That is why the extension list must be written down rather than argued about afterwards.

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