Components of a Canadian Builder Contract

A well-drafted contract is essential for the proper and fair building process. Contracts are legal entities that must be respected and clearly defined. There are 3 types of construction contracts in Canada, namely:

Lump Sum

A fixed price is agreed upon and the owner of the property agrees to bear the total costs of labor and materials.

Unit Price

The contract is priced by the number of units delivered multiplied by a set rate per unit. This is less risky and does not affect the contractor’s total cost in any way.

Cost Plus a Fee

As one of the most complex agreements, the contractor agrees to keep records of the costs of labor and materials while the owner of the property agrees to pay for all the costs plus a markup that has been agreed upon.

A contract is an official paper that constitutes every aspect of the builder and owner agreements. The components of a Canadian builder contract should consist of:

Identity

Both the owner and builder’s name and other details should be clearly listed.

Work

The contract should also clearly stipulate the work that needs to be carried by the contractor. This part is highly important as it usually contains the time, labor, and costs required for the completion of the work as well. This section should also cover any sub-contractor who is also undertaking any job and which contractor is responsible for which work.

Permits

Is there any important permit or document that your contractor needs? The builder contract should elaborate on whether the contractor and owner have the right to do renovation or carry out building in the State they’re in. The start and end date of the work should also be listed along with the total costs to be incurred.

Warranty

If your contractor is providing some sort of warranty, then it should be included in the contract. This allows the property owner to have proof for future references if need be. The anticipated problems of the construction should also be mentioned and one of the most important parts include dispute resolution. Most of the time, a third party is brought to the mix to resolve any issues. This should be clearly written in the contract and lawyers should verify it.

Builder contract has a lot of different sections that need to be clearly written and mentioned. A lawyer is best to consult when drafting a construction contract.