Why a Written Contract Matters
A verbal agreement is legally binding — but it is almost impossible to prove what was agreed if a dispute arises. A written contract sets out both parties' rights and obligations in a form that can be referred to if things go wrong.
Common disputes in residential construction that a good contract prevents or resolves:
- "That's not what I agreed to" — scope disputes
- "I thought that was included in the price" — cost disputes
- "You said it would be finished by June" — programme disputes
- "You've done the wrong thing and now I want my money back" — quality disputes
- "I'm not paying until the damp sorts itself out" — retention and defects disputes
What Should a Building Contract Include?
1. The Parties
Full legal names of the building owner (client) and the contractor. If the contractor is a limited company, use the full registered company name.
2. The Works
A clear description of the works to be carried out, ideally referencing:
- The specification or scope of works document
- The approved drawings (including drawing numbers and revision references)
- Any specific items to be supplied by the client
Avoid ambiguous descriptions such as "rear extension as discussed." Reference documents unambiguously.
3. The Contract Sum
The agreed price for the works described. State whether the price:
- Is fixed (a lump sum) — the contractor carries the risk of material price increases
- Is subject to provisional sums (allowances for undefined elements — to be adjusted when the actual cost is known)
- Is day-work based (labour and materials at agreed rates)
For residential works, a fixed lump sum with clearly defined provisional sums is preferable.
4. Variations
A clear mechanism for agreeing and pricing changes to the scope of works. A variation should require:
- A written instruction from the client
- A written quotation from the contractor before the work is carried out
- Written acceptance by the client
Verbal instructions to change the scope are the most common cause of cost disputes.
5. The Programme
The expected start date, duration, and completion date. Also address:
- What happens if the programme is delayed (and by whose fault)
- Whether there is a liquidated damages clause (a pre-agreed amount per day or week of delay)
- Key milestone dates if relevant
6. Payment Terms
When and how payment is made:
- Stage payments tied to programme milestones (recommended for most residential works)
- Payment on valuation (monthly assessment of value completed)
- Deposit amount if any (industry guidance suggests no more than 10–25% of the contract sum as a deposit)
The Housing Grants, Construction and Regeneration Act 1996 (as amended) applies to most construction contracts — it requires adequate payment notices, pay less notices, and adjudication rights. Even for small domestic contracts, the spirit of these provisions should be reflected.
7. Retention
A retention is an amount withheld from each payment (typically 5%) as security against defects, released after a defects liability period (typically 6–12 months after practical completion). Retention protects the client if defects emerge.
8. Insurance
Confirm that the contractor holds:
- Public liability insurance (minimum £2m, preferably £5m for residential works)
- Employers liability insurance (legally required if the contractor employs workers)
- Contract works insurance (covering the works and materials on site against loss or damage)
Request copies of current insurance certificates before work starts.
9. Defects Liability Period
The period after practical completion during which the contractor is obliged to return and remedy defects at their own cost. Typically 6–12 months for residential works.
10. Dispute Resolution
A mechanism for resolving disputes without immediate recourse to litigation. For construction contracts, adjudication is a fast and relatively affordable option. A home owner contract should ideally include:
- A process for notifying defects or disputes
- A good faith negotiation period
- Adjudication as a fast-track dispute resolution route
Recommended Contract Forms
Several standard contract forms are appropriate for residential works in London:
- JCT Homeowner Contract: A plain-English contract specifically designed for homeowner-contractor agreements on works under approximately £250,000
- JCT Minor Works: Suitable for works between approximately £100,000 and £1,000,000 where a contract administrator is appointed
- FMB Contract: The Federation of Master Builders provides a standard form for members
Avoid handwritten or heavily bespoke contracts without legal review — they may be missing essential provisions or create unintended obligations.
RCB Design & Build
RCB issues a clear written contract for all works, using the JCT Homeowner Contract or JCT Minor Works Building Contract as appropriate. We include a full specification, schedule of works, programme, payment schedule, and insurance confirmation in the pre-contract pack.