# S18. What a construction contract actually looks like
A construction contract is just your quote, payment terms and risk split written down properly. If you know the basic blocks, you don't need to be scared of the word "contract".
1. THE SHORT VERSION
Under the Housing Grants, Construction and Regeneration Act 1996, a "construction contract" is basically any agreement to do construction work, arrange it, or supply labour for it – written or verbal.
A decent contract spells out who's involved, what you're doing, for how much, by when, how you get paid, and what happens if things go wrong.
If you sign something and don't know those answers, you're flying blind.
2. WHAT COUNTS AS A "CONSTRUCTION CONTRACT" UNDER THE ACT
The Construction Act uses "construction contract" in a specific way. In plain English, it's any agreement for:
- Doing construction operations (building, civil engineering, repairs, maintenance, alterations).
- Arranging for construction operations to be carried out by others (main contractor to subbies).
- Providing labour for construction operations.
It also pulls in certain design/consultancy work (architectural, design, surveying, etc.).
Key point:
- It doesn't have to be a fat JCT book – a signed quote + acceptance email can be a construction contract.
- Contracts with a residential occupier (homeowner in their own house) are carved out of some parts of the Act (e.g. adjudication/payment rules), but they're still contracts and still enforceable.
If it walks like a construction contract and quacks like one, the law probably treats it as one.
3. THE MAIN PIECES EVERY CONSTRUCTION CONTRACT HAS
Whatever the format (email, bespoke, JCT Minor Works), most contracts cover the same core areas:
Parties Who is promising what to whom – correct legal names and addresses of client and contractor.
Scope / Works What you're actually doing – drawings, specifications, schedules, method statements. This is the heartbeat of the contract.
Price and payment Lump sum vs measured vs day rate; how the contract sum is calculated. Payment structure, due dates, final dates, how variations are valued.
Time Start date, completion date or period, and rules on extensions of time (weather, variations, delays by the client).
Quality and standards Specifications, workmanship standards, testing and inspection, snagging.
Changes / Variations How instructions and variations are issued and priced.
Risk, insurance and liability Who insures what (works, existing structures, public liability, PI), and what each party is liable for.
Defects and defects period How defects are dealt with, the "rectification period" after completion, and who pays.
Termination and dispute resolution How either side can end the contract, and how disputes go to adjudication/arbitration/court.
Most standard forms (like JCT Minor Works) just wrap these ideas in consistent wording.
4. HOW THE CONSTRUCTION ACT SHAPES WHAT'S INSIDE
For contracts the Act fully covers (mainly non‑domestic and B2B jobs), it pushes certain things into the contract:
- Payment mechanism – there must be an "adequate mechanism" for determining what payments become due, when they become due, and a final date for payment.
- Interim payments – for projects over 45 days, you're entitled to stage or periodic payments, not just one lump at the end.
- Payment notices – the payer (or payee) must issue a notice saying how much they think is due and how it's calculated.
- Pay less notices – if the payer wants to pay less, they must send a notice in time, explaining why and how they got to that figure.
- "Pay when paid" ban – clauses that make your payment conditional on them being paid upstream are generally invalid (except insolvency).
- Right to adjudicate "at any time" – any party can refer a dispute to adjudication, which is a fast, 28‑day-ish process.
If the written contract doesn't include compliant payment/adjudication terms, the statutory Scheme for Construction Contracts fills in some default rules.
5. WHAT A BASIC CONSTRUCTION CONTRACT MIGHT LOOK LIKE IN REAL LIFE
At the smaller end, it may be:
- Your detailed quote (scope, exclusions, price, payment terms, timings).
- Plus a short set of standard terms (insurance, variations, defects, termination, dispute).
- Plus any drawings/specs attached or referenced by date.
Once the client signs or accepts in writing, that bundle is your construction contract.
At the bigger end, it might be a standard form like JCT Minor Works 2024, filled in with:
- Contract particulars (names, price, dates, insurance options).
- Standard conditions (payment, time, variations, defects, dispute).
- Appendices (programme, specs, drawings, design responsibilities).
You don't need to draft those from scratch, but you do need to understand the headings and how they affect you.
6. CLAUSES YOU SHOULD ALWAYS BE ABLE TO POINT TO
When someone hands you a contract, you should be able to find, in under 10 minutes:
- Scope – exactly what you're responsible for (and ideally what you're not).
- Price and adjustments – how the contract sum is calculated and how it changes for variations.
- Payment – due dates, final dates, how to apply, notice periods, and any "pay less" mechanism.
- Time and extensions – completion date, grounds and process for extension of time, and any delay damages.
- Insurance and risk – who insures the works, existing structures, and who carries what risk.
- Defects / rectification period – how long you're on the hook to come back and fix things.
- Termination – how either side can end the contract and what happens to payment and work done.
- Dispute resolution / adjudication – how disputes are escalated and under what rules.
If you can't quickly identify those, don't sign until someone translates it.
7. QUICK CHECKLIST - "DOES THIS ACTUALLY LOOK LIKE A CONSTRUCTION CONTRACT?"
Ask yourself:
- Are the parties, scope, price, and time clearly written somewhere?
- Does it say what happens if the job changes or if extra work is instructed?
- Is there a clear payment mechanism – when you apply, when it's due, and when it must be paid?
- Does it avoid obvious banned stuff like blanket "pay when paid" (outside insolvency)?
- If things go wrong, do you know how time extensions, defects, and disputes/adjudication are handled?
If any of those are missing, they don't vanish – the law and default schemes plug some gaps – but you're far better off spelling them out up front.
WHAT TO DO NEXT
- Next time you are handed a contract, find the scope, price, payment, time and defects clauses before you sign anything.
- If you cannot find those clauses within 10 minutes, ask for a plain-English summary before committing.
- Read S18a to learn the 10 red-flag clauses that can wreck your profit.
- For domestic jobs, make sure your quote covers the basics listed in this guide so it acts as a proper contract.
- If the contract is complex, get someone with experience to walk you through the risk before you sign.
SOURCES
- Housing Grants, Construction and Regeneration Act 1996. https://www.legislation.gov.uk/ukpga/1996/53
- Consumer Rights Act 2015. https://www.legislation.gov.uk/ukpga/2015/15
- Scheme for Construction Contracts (England and Wales) Regulations 1998. https://www.legislation.gov.uk/uksi/1998/649
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