The construction contract is a contract document that must specify a mutual agreement in writing between the employer, regarding the payment for the construction work as stipulated in the agreement, and the contractor (the construction contractor) who is responsible for carrying out the construction according to the agreed details within the duration specified in the contract until completion.
Contract Content or Details to Include in the Construction Contract
1. Date and Location of the Contract
To specify when the construction contract comes into effect and its duration in years.
2. Personal Information of the Contracting Parties Between the Employer and Contractor (Construction Contractor)
Including names, addresses, organizations, companies, and other information that can verify identity and be checked.
3. Scope and Nature of the Responsible Work
The employer must agree on what type of house to be constructed, which should be clearly specified in the contract, whether it is the characteristics of the house or building design and the construction location.
4. Price and Payment Details
The total contract sum for construction work should be paid in advance, as a percentage, and divided into payment installments, with the specific details of the construction work stipulated, followed by payments for each installment at a percentage rate.
5. Duration of the Contract
Counting from the beginning of construction until it is completed, specifying the approximate duration for construction.
6. Duties and Responsibilities of the Employer
The contract document should clearly outline the employer's responsibilities, such as:
- The right to change or amend construction items and designs or change construction materials within the specified period without terminating the contract, but should create an additional document to agree formally in writing with mutual consent from both parties. If the change in materials affects the strength and standards of the structure according to the original plans, the contractor (construction contractor) has the right to refuse as well.
- The employer has the right to order a work stoppage if they see that the work execution does not comply with the plans, or may have the right to withhold and not pay for that portion of the work if the contractor fails to repair the damages or correct the issues as requested.
- Inspect each phase of the work.
7. Duties and Responsibilities of the Contractor (Construction Contractor)
The contractor must execute the construction correctly and completely according to the construction contract within the specified duration outlined in the contract, with written documents informing the employer. The homeowner must inspect the materials used for construction, the site, and the construction procedure to ensure compliance with the plans and BOQ. If it is found that the construction materials are not as stipulated in the contract, the homeowner has the right to suspend construction and reject materials that do not meet the specifications set out in the contract immediately.
8. Tools, Materials, and Equipment Used for Construction
To ensure that the tools, materials, and equipment used for construction are of good quality and suitable for the nature of the work, a list of these should be attached to the documents for verification purposes.
9. Quality Assurance of Work After Handover
The warranty period for the work depends on the type of work and negotiations. If damages occur to the house during the warranty period, such as a leaking roof, cracks, or other reasons not related to natural disasters, the contractor must rectify the issues to restore the condition to the original usable state.
10. Termination of the Contract and Right to Claim Damages
This contract document should clearly specify what happens if either party breaches the terms, leading to damage; therefore, it must outline the conditions in writing to inform and agree to be held liable if such occurrences happen.
However, having a construction contract is very important as it affects the operation and success of the construction project to help reduce conflicts that may arise between the contractor and the employer in case of errors or construction mistakes that may happen in the future.
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