What to Include in a Contractor Contract: 15 Clauses That Decide Whether You Get Paid

A contractor contract needs fifteen things: identified parties, a detailed scope with exclusions, the contract price, a payment schedule, change-order procedure, schedule and delay provisions, materials and substitutions, permits and responsibilities, site access and conditions, insurance and licensing, warranty, lien rights, termination, dispute resolution, and signatures with dates.

That list is not long because contracts need to be long. It is long because each item corresponds to a specific way jobs go wrong. Below, each clause comes with what it is actually protecting you from — and the wording that makes it work.

1. The parties, properly identified

Full legal names, not trading names. If you operate as an LLC, the contracting party is the LLC — and you must sign in that capacity, or you risk personal liability.

• Your full legal entity name, address, and licence number where required
• The client's full legal name and address; for a company, the registered entity, not the brand
• The property address, if different from the client's address
• Who has authority to approve changes and sign off on completion

That last line is easy to skip and expensive to omit. On a job where a spouse, a property manager, or a site foreman is the day-to-day contact, name the person whose approval actually counts.

2. Scope of work — with exclusions

This is the most important clause in the document and the one most often written in a single sentence.

A usable scope answers: what specific work will be performed, to what standard, where, and what result counts as complete. Write it as a numbered list, not a paragraph.

Then add exclusions. This is the half most contracts omit, and it is where most disputes actually live:

3. Contract price

State the total clearly and say what pricing model it is:

• Fixed price — one number for the defined scope. Simplest for the client, and it puts estimating risk on you.
• Time and materials — hourly or daily rate plus materials at cost or cost-plus-markup. State the rate, the markup percentage, and any not-to-exceed cap.
• Cost plus — documented costs plus an agreed fee or percentage. Requires an audit-rights clause and clear rules on what counts as a cost.
• Unit price — a rate per unit (per outlet, per square foot) with estimated quantities and a re-measurement mechanism.

Say explicitly whether sales tax is included. Say what the price assumes — for example, that existing wiring is accessible and to code. Those assumptions become the basis for legitimate change orders when reality differs.

4. Payment schedule

Tie payments to verifiable events, not calendar dates. Milestones you can prove are milestones you can invoice.

Also specify: how invoices are delivered, the payment window (net 7, net 14, net 30), accepted methods, and the consequences of late payment. That last one gets its own guide — contractor payment terms and late fees.

5. Change orders

The single highest-return clause after scope. Without it, every mid-job request becomes an argument at invoice time.

The last sentence is what gives the clause teeth: it makes signing the change order the client's problem, not yours. Full process in construction change orders.

6. Schedule and excusable delay

Give a start date and a target completion date, then list what extends them without penalty:

• Weather preventing safe or code-compliant work
• Permit or inspection delays outside your control
• Client-caused delays — late decisions, denied access, unpaid invoices
• Material lead times and supply-chain disruption
• Concealed or unforeseen site conditions
• Changes in scope

If the client wants a hard deadline with liquidated damages, that is negotiable — but it should come with a matching bonus for early completion, and a firm cap on total exposure.

7. Materials, allowances, and substitutions

Say who supplies what. If the client supplies fixtures, state that you are not responsible for their defects, availability, or lead times.

Where selections have not been made, use an allowance — a stated budget per item, with the difference billed or credited once the actual selection is made. Write the allowance amount into the contract so the reconciliation is arithmetic rather than negotiation.

Reserve the right to substitute materials of equal or better quality where a specified item is unavailable, with notice to the client.

8. Permits, inspections, and responsibilities

State who pulls permits, who pays for them, and who schedules inspections. Note that permit fees may be excluded from the contract price and billed at cost.

Add that the client is responsible for disclosing known conditions — asbestos, prior unpermitted work, buried utilities — and that discovery of undisclosed conditions is grounds for a change order.

9. Site access and conditions

Small clause, big effect. Specify:

• Working hours and days of access
• How access is provided — keys, codes, someone on site
• Where you may store materials and park vehicles
• That the client will clear the work area before you start
• Availability of power, water, and toilet facilities
• That the client keeps pets and children out of the work zone

Then add: if you arrive and cannot work because access was not provided, a stated call-out charge applies and the schedule extends.

10. Insurance and licensing

List your licence number, your general liability coverage, and your workers' compensation status. Many states require the licence number on every residential contract, and some require specific wording about the state licensing board.

If subcontractors will be used, say so, and confirm they carry their own insurance.

11. Warranty

Offer a defined workmanship warranty — commonly one year — and state clearly that manufacturer warranties on materials pass through to the client and are not your obligation.

Exclude the predictable: normal wear, client-caused damage, misuse, modifications by others, failures arising from client-supplied materials, and pre-existing conditions.

12. Lien rights

Mechanics lien law is state-specific and often requires a preliminary notice within a strict window after you start work. Missing that window can forfeit your lien rights entirely.

Your contract should acknowledge your lien rights, state any required statutory notice language, and set out when lien waivers will be exchanged — normally conditional waivers with each progress payment and an unconditional final waiver after the last payment clears. See lien waivers explained.

13. Termination

Both sides need an exit, and you need to be paid for work already done.

• Client termination for convenience — allowed on written notice, with payment for work completed, materials ordered, and a reasonable demobilisation charge.
• Your termination for cause — non-payment beyond a stated number of days, unsafe conditions, or denial of access, after written notice and an opportunity to cure.
• Suspension for non-payment — the right to stop work if an undisputed invoice goes unpaid, with the schedule extended accordingly.

The suspension right is more useful in practice than termination. It gives you leverage without ending the relationship.

14. Dispute resolution and governing law

Specify the state whose law governs and where any proceedings happen — your county, not the client's, where you can negotiate it.

A tiered clause works well for small businesses: direct discussion first, then mediation, then binding arbitration or court. Also decide whether the prevailing party recovers legal fees. That provision cuts both ways, so think about it rather than copying it in by default.

15. Signatures and dates

Both parties sign, both date. If a company is signing, the signer's name and title should appear so authority is on the face of the document.

Electronic signatures are valid for construction contracts under the ESIGN Act — see are electronic signatures legally binding. Keep the executed copy and the audit trail together.

The pre-send checklist