This form is a Construction Contract. The form contains the following subjects: scope of work, work site, and insurance. The contractor's warranty is limited to defects in workmanship within the scope of the work performed by the contractor.
What is a Construction contract agreement?
If you’re planning to build, renovate or reconstruct your house, you will need to enter into a contract for home construction with the building contractor, defining your mutual rights and responsibilities. This agreement contains project specifics, the contractor’s license and insurance details, the requested scope of work, etc. It may also determine the potential lien on the property should the work not be paid in full.
Types of construction contracts
Depending on the payment arrangements determined by parties, there are four basic types of home builders’ contracts:
1. Fixed price (or lump-sum) agreements set the price for the completed job right from the start. Although fixed, the document may also include provisions defining penalties (for example, if the constructor fails to finish the work on schedule).
2. Cost plus construction agreements set the price for the finished work based on building materials and labor with additionally mentioned “plus” (a percentage of the total costs or a fixed fee).
3. Time and material agreements set the price for the work without a “plus,” but the client pays the contractor a daily or hourly rate while they are under contract.
4. Unit-price agreements are standard in bidding, particularly for federal building projects. Both owner and contractor define the price that the contractor charges for a standard unit without any specific extra fees for other units.
The first two types of contract for home construction mentioned are the most popular ones. Let’s take a closer look at them.
Fixed price vs. cost-plus contract benefits
The fixed price agreement benefits owners more than builders, as it determines at the moment the parties seal the deal the exact price the contractor will get after they complete all the work. Builders risk not getting the estimated profits they initially anticipated, as expenses may increase significantly but remain the constructor’s responsibility.
The cost-plus construction deal contains the evaluation of the final project cost; however, it doesn’t determine the final contract price until the contractor completes all the work. Unlike the fixed-price agreement, it separates expenses and sets the profit rate (as a percentage of the final project cost or as a flat amount), so contractors prefer this type of agreement; it is riskier for homeowners.
Information you should provide in the construction contract agreement
The presented Construction Contract for Home is a universal multi-state construction contract template. This sample describes typical terms for a home building contract. Download a printable document version from our website or amend and fill it out online. Make sure to provide the following information:
• Name and contact details of the contractor and their license number;
• Name and contact details of the homeowner;
• Property legal description from county clerk’s records;
• Project description with blueprints and building specifications;
• Scope, description of work, and its estimated final dates;
• Costs of work and responsibilities of parties for any breach of contract.
A Delaware Construction Contract for Home — Fixed Fee or Cost Plus is a legally binding agreement between a homeowner and a contractor in the state of Delaware for the construction, renovation, or remodel of a residential property. This type of contract is used to establish the terms and conditions under which the construction project will be carried out, ensuring that both parties are fully aware of their rights and obligations throughout the process. The contract serves as a roadmap for the project and provides protection for both the homeowner and the contractor. A fixed fee contract is one type of agreement in which the contractor agrees to complete the project for a specific, predetermined amount of money. This type of contract is suitable when the homeowner has a clear understanding of the scope of the project and wants a firm price for the construction work. The fixed fee protects the homeowner from any unexpected cost overruns, and the contractor assumes the risk if the project ends up being more expensive to complete. On the other hand, a cost-plus contract is another variation that involves the homeowner paying the contractor for both the actual cost of the work and an agreed-upon percentage or fee for the contractor's services. This type of contract is suitable when the scope of the project is uncertain or likely to change, as it allows for flexibility and adjustment of the budget as the construction progresses. In both types of contracts, the agreement should include specific details such as the project's start and completion date, a detailed description of the work to be performed, the materials and equipment to be used, any necessary permits or licenses, and insurance requirements. The contract should also outline the payment schedule, including the amount and timing of progress payments, and any additional provisions related to disputes, warranties, and termination. It is crucial for both the homeowner and the contractor to thoroughly review and understand the terms and conditions outlined in the construction contract, seeking legal advice if necessary. This helps to ensure a transparent and successful construction process, minimizing the risk of misunderstandings or disputes that may arise during the project. Overall, a Delaware Construction Contract for Home — Fixed Fee or Cost Plus is a comprehensive and detailed legal document that establishes the rights, obligations, and expectations of both parties involved in a residential construction project in Delaware.
