Why a written contract matters more than you think
Most disputes between homeowners and building contractors come down to one of two things: what was agreed and what was not. A verbal agreement, an email chain, or a one-page quote provides almost no protection when a dispute arises over scope, price, or quality.
A proper written contract defines:
- Exactly what the contractor is building
- The price, and under what circumstances it can change
- The programme and what happens if it slips
- How variations (changes) are handled
- What the payment schedule looks like
- What happens if either party defaults
- Who is responsible for insurance
- How disputes are resolved
Without this, you are relying on memory, goodwill, and the courts — which is an expensive and uncertain combination.
The main types of building contract in the UK
JCT Contracts
The Joint Contracts Tribunal (JCT) produces a suite of standardised building contracts widely used in the UK. For residential projects, the most relevant is:
JCT Homeowner Contract (JCT HB 2016)
- Designed for domestic clients using a building contractor
- Plain English format
- Covers work schedule, price, payment, variations, insurance, and dispute resolution
- Available directly from the JCT (approximately £30–£40)
- Strongly recommended for projects over £25,000
JCT Minor Works (MW 2016)
- More formal, used by commercial clients but sometimes used by homeowners
- Requires an Architect or Contract Administrator to administer
- Not typically suitable for straightforward domestic projects without professional oversight
Fixed-price contracts
A fixed-price contract sets a specific sum for the described works. The contractor bears the risk of cost overruns — if materials or labour cost more than anticipated, that is their problem, not yours.
In practice, true fixed-price contracts are only possible when the scope is fully defined. If you do not have complete drawings and a comprehensive specification before signing, the contractor cannot genuinely fix the price — they will protect themselves with exclusions, provisional sums, and variation rights that effectively pass risk back to you.
A fixed-price quote from a contractor does not mean you will pay that amount. It means you will pay that amount for the defined scope. Any change to the scope — even minor — is a variation, and variations cost extra.
Cost-plus contracts
A cost-plus contract pays the contractor their actual costs (labour, materials, subcontractors) plus an agreed management fee (typically 10–20%). The homeowner bears the cost risk.
Cost-plus is appropriate when:
- The scope cannot be defined in advance (e.g., remediation works with unknown extent)
- The client wants maximum transparency on costs
- The project is highly complex or fast-moving
Cost-plus is not appropriate when the client wants price certainty. It requires a high level of trust and active cost management.
Key contract clauses to understand
Scope and specification
The contract must describe, in detail, what is being built. A reference to "as per drawings" only works if the drawings are comprehensive. Ensure:
- Drawings are named, dated, and attached
- Specifications cover materials, finishes, and standards
- Exclusions are clearly listed
Variations clause
Almost every project involves changes. The contract should specify:
- How variations must be authorised (in writing)
- How variations are priced (fixed price, daywork rate, or cost-plus)
- Whether the contractor can decline a variation
Without a written variations clause, changes become verbal agreements — and verbal agreements are disputes waiting to happen.
Payment schedule
Never pay for work in advance of it being done. The standard approach is:
- A deposit (typically 10–15%) before work commences
- Stage payments tied to physical milestones (e.g., foundations complete, structure complete, first fix complete)
- A retention (typically 2.5–5%) held for a defects liability period (typically 12 months after practical completion)
Retention protects you against snags that appear after practical completion. A contractor unwilling to accept retention should be treated with caution.
Practical completion and defects liability
Practical completion is the point at which the works are substantially complete and you can occupy the building. It does not mean perfect — minor snags can remain outstanding at practical completion.
After practical completion, a defects liability period (typically 6–24 months) begins. The contractor remains responsible for making good any defects that appear during this period. At the end of the defects period, the retention is released.
Insurance
The contract should specify:
- That the contractor maintains public liability insurance (minimum £2 million, ideally £5 million+)
- That the contractor maintains employers' liability insurance (legally required if they have employees)
- Who is responsible for insuring the works during construction (the existing structure, the new works, and materials on site)
For major projects, consider Joint Names Insurance covering both the contractor and the homeowner for the works in progress.
Dispute resolution
A good contract includes a mechanism for resolving disputes without going to court. Options include:
- Adjudication (statutory right under the Housing Grants, Construction and Regeneration Act 1996 for commercial contracts; optional but recommended for domestic contracts)
- Mediation
- Arbitration
- Small claims court (for smaller sums)
The JCT Homeowner Contract includes a simple dispute resolution procedure.
Red flags in contractor contracts
Be wary of:
- "Subject to survey" price adjustments after contract is signed without defined criteria
- No retention or refusal to accept any holdback
- Payment in advance for significant sums before work is started or completed
- Unlimited variation rights allowing the contractor to increase the price without your written approval
- No defects liability period
- Exclusion of indirect losses (means they cannot be held responsible for consequential costs of defects)
- Short limitation periods on defects claims
Practical recommendations for homeowners
1. Always have a written contract — no matter how small the job or how trustworthy the contractor seems
2. Use the JCT Homeowner Contract for projects over £10,000 — it costs £30–40 and is worth every penny
3. Attach the drawings and specification to the contract — reference them by name and revision
4. Agree a payment schedule tied to milestones before work starts
5. Retain 5% until the end of the defects liability period
6. Insist all variations are authorised in writing before they are carried out
7. Do not sign a contract you have not read — if you do not understand a clause, ask
Summary
A proper building contract is not bureaucracy — it is the document that protects you when things go wrong, and the framework that makes it less likely that things go wrong at all. Whether you use a JCT Homeowner Contract, a fixed-price agreement, or a bespoke document, the key elements are the same: clear scope, fair payment, defined variations, insurance, and a route to resolution if there is a dispute.
Dwellinger's Builder Score-verified contractors are all contractually aware and can provide properly structured written agreements for your project.