Making a Contract

Last updated: June 2, 2026

Even small projects can become complicated once work starts. Try to do as much of the thinking ahead of time and make a clear agreement with the person carrying out the work. This should reduce uncertainty and avoid problems later, for both you and the builder.

Most building disputes do not start because someone is dishonest. They usually start because different people make different assumptions. A homeowner thinks one thing is included, the builder thinks something else. One side assumes work will be finished by a certain date, while the other sees that date as only an estimate.

A clear agreement helps avoid these misunderstandings by setting out what is being built, how much it will cost, and when it should be completed. This agreement is called the contract.

For small projects, this might simply be a set of bullet points. For larger or more complex building projects, it is often a formal contract using a standard template.

Either way, the purpose is the same: to reduce uncertainty and make sure everyone understands what is expected before work begins.

At its core, every building contract is addressing three simple questions:

• What work is being done?
• How much will it cost?
• When will it be finished?

These are all obvious, but the clearer these three things are set out before work starts, the less chance there is of disagreement later.

This is the most important part of any building contract. It defines exactly what the builder is agreeing to provide.

In practice, this information is normally described using:

• Drawings (plans, elevations, sections and details)
• A written specification (materials, finishes and quality standards)
• A schedule of works (a structured list of tasks and items)

These things, taken together, are called the contract documents.

Drawings and written information should always work together. Drawings show what is being built. The written information explains how it is to be built and the standard expected.

The clearer this information is before builders prepare quotations, the easier it becomes to:

• Compare prices fairly
• Avoid misunderstandings
• Reduce the risk of disputes later

A common source of disagreement is where something appears obvious to one party but has never actually been stated. The contract documents should remove as much ambiguity as possible.

The contract should clearly state the agreed contract sum. However, the total cost is only part of the story.

The equally important question is: when is the builder paid?

Paying the entire contract sum before work starts is rarely advisable. For most domestic projects, payments are made in stages as work progresses. This raises an important question: what counts as completed work?

Take a bath installation as an example. A bath may have been:

• Ordered
• Delivered to site
• Installed
• Fully connected, tested and ready for use

Each of these represents a different stage of completion. A contract should make it clear which stage triggers payment.

Similarly, homeowners should consider questions such as:

• What happens if materials are damaged before completion?
• What happens if defects appear after the project is finished?
• What happens if part of the work is incomplete at handover?

On some domestic building projects, the homeowner retains a small percentage of the contract sum, typically between 2.5% and 5%, for a period after completion.

This is known as a retention. The retained amount acts as protection if:

• Defects become apparent
• Minor items remain unfinished
• Small issues need to be addressed after handover

Once these matters have been resolved, the retained amount is released to the contractor.

A contract should clearly state:

• The start date (or expected start window)
• The anticipated completion date
• Any key milestones if appropriate

It should also explain what happens if the project is delayed.

Many contracts include provisions for liquidated damages. These are pre-agreed amounts payable if the project finishes late and the delay causes genuine financial loss, such as additional accommodation costs.

However, not all delays are the builder's responsibility. Legitimate causes of delay may include:

• Extreme weather
• Material shortages
• Unforeseen site conditions
• Changes requested by the homeowner

A good contract should explain:

• What constitutes a valid delay
• How additional time is assessed
• Who decides whether an extension of time is justified

This helps ensure that expectations remain realistic and fair for both parties.

Changes are a normal part of many building projects. You may decide to alter a layout, upgrade a finish, add additional work or remove something from the original scope.

However, every change has the potential to affect:

• Cost
• Timing / programme
• Quality

A good contract should explain how changes are instructed, priced and agreed before the work is carried out. This helps prevent disagreements and ensures everyone understands the consequences of a change before it is made.

For many domestic projects, a standard form of contract is often the best solution. You do not necessarily need specialist legal advice to use one. Some contracts are specifically written for homeowners and are designed to be straightforward to complete and understand.

One of the most widely used options in the UK is the JCT Home Owner Contract. There are two main versions:

Homeowner and Builder

This is used where the homeowner deals directly with the builder.

Homeowner, Builder and Contract Administrator

This version includes a contract administrator, typically an architect or project manager, who helps administer the contract fairly and independently.

These contracts are:

• Written in plain English
• Designed specifically for domestic projects
• Structured to deal with common building issues
• Clear about what happens if problems arise

They are normally completed and signed before work begins.

Make it clear during the quotation stage which form of contract will be used. This ensures all builders are pricing on the same basis and avoids surprises once a contractor has been selected.

A building contract is not there to create bureaucracy or distance between you and your builder. It exists to:

• Reduce uncertainty
• Clarify expectations
• Prevent disputes
• Protect both parties fairly

As an architect, I have seen modest projects run smoothly and expensive projects encounter serious difficulties. The difference is often not the quality of the builder, but how clearly expectations were agreed at the start.

No contract can remove every risk from a building project. What it can do is provide a shared understanding of what is being built, how much it will cost and how success will be measured.