Why Building Contracts Matter
A building contract is a legally binding agreement between you and your contractor. It defines what is being built, the price, the programme, the payment schedule, the responsibility for defects, and what happens if things go wrong. Without a clear contract, disputes are harder to resolve and your legal position may be weaker than you think.
Many homeowners sign contracts quickly without reading them properly. This guide covers the key clauses you should understand before signing any building contract for a renovation, extension, or loft conversion in the UK.
The Scope of Works
The single most important part of any building contract is the description of what the contractor is actually agreeing to build. This is usually defined by a combination of the contract itself, the drawings, and the specification. Read these carefully. Any ambiguity in the scope is a potential source of dispute.
Check that everything you expect to be included is clearly described. If the contract says the contractor will supply and install kitchen units, check whether this includes worktops, handles, and appliances, or just the carcasses. If the contract includes external works, check whether drainage connections are included or whether these are a separate cost. Vague scope leads to disagreements about what is included in the price and what is an extra.
The Contract Sum and Payment Schedule
The contract sum is the agreed total price for the works. Check whether this is a fixed-price lump sum or whether it includes provisional sums — allowances for items not fully specified at the time of contract, which are subject to adjustment once the actual cost is known. Provisional sums are legitimate for items where the final specification is genuinely uncertain, but a contract with many large provisional sums gives less price certainty than one based on a fully specified scope.
The payment schedule sets out when and how much is paid at each stage. Check the payment intervals, whether payments are linked to programme milestones, and what the process is for authorising each payment. Good contracts include interim valuations or stage payment triggers so that payment reflects progress rather than simply the passing of time.
Retention Clauses
As discussed in a separate guide, retention is a percentage of each payment withheld as security against defects. Check the retention rate, when the first half is released (at practical completion), and when the second half is released (at the end of the defects liability period). Make sure the defects liability period is clearly stated — typically six months to one year.
Variations
A variation is any change to the agreed scope of works. The contract should describe the process for instructing and pricing variations. Reputable contractors issue variation orders with a price before the additional work starts. If the contract allows contractors to carry out variations and claim the cost later without prior agreement, this creates risk of uncontrolled cost increases. Make sure you understand how variations are authorised and priced before you sign.
Delays and Extensions of Time
Most contracts include a mechanism for the contractor to claim an extension of time if certain events cause delay — events outside the contractor's control such as exceptionally adverse weather, late instruction from the client, or delays in approvals. Check which events entitle the contractor to more time, and what the process is for notifying and agreeing extensions. If the contract has no extension of time mechanism, the contractor may have a common law right to claim additional time anyway, but the process will be unclear.
Practical Completion and Defects
Practical completion is the formal end of the construction phase. It triggers retention release and starts the defects liability period. Make sure the contract defines practical completion clearly and identifies who certifies it. After practical completion, check your obligation to notify defects promptly and within the defects liability period so the contractor can remedy them.
Dispute Resolution
Check what the contract says about disputes. Most UK construction contracts include adjudication as a first-step dispute resolution mechanism — a fast, relatively inexpensive process for resolving disputes without going to court. If the contract does not mention adjudication, it may still be available under the Housing Grants, Construction and Regeneration Act 1996 for construction contracts of the right type. Knowing your dispute resolution options before you need them is important.
Using Standard Form Contracts
For residential projects, standard form contracts such as the JCT Homeowner Contract, JCT Minor Works Building Contract, or JCT Intermediate Building Contract are widely used and well understood by the industry. These forms have been developed over many decades and include balanced provisions for both parties. Be cautious about highly bespoke contracts produced by contractors that heavily favour the contractor's position — compare them against what a balanced standard form would say.
At RCB Design and Build, we use appropriate standard form contracts for all our projects and provide clear explanations of how each clause works before anything is signed. Contact us to discuss the contract framework for your project.