Construction Contract (Canada)
This Construction Contract (the "Contract") is entered into on [Effective Date] (the "Effective Date") by and between
[Client’s Name], [Client Type], with an address at [Client’s Address], [Client’s City], [Client’s Province] [Client’s Postal Code] [Client’s Details] (hereinafter referred to as the "Client"), and
[Contractor’s Name], [Contractor Type], with an address at [Contractor’s Address], [Contractor’s City], [Contractor’s Province] [Contractor’s Postal Code], phone: [Contractor’s Phone], CRA Business Number [Contractor’s BN], provincial licence [Contractor’s Licence] [Contractor’s Details] (hereinafter referred to as the "Contractor"), collectively referred to as the "Parties" and individually as a "Party".
WHEREAS the Client desires to retain specific construction services of a competent contractor;
WHEREAS the Contractor possesses the necessary qualifications, experience, expertise, permits, and licences to provide the construction services;
NOW, THEREFORE, in consideration of the mutual promises and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties have agreed as follows:
SUBJECT OF THE CONTRACT. The purpose of this Contract is [Purpose]. According to the terms and conditions of the Contract, the Contractor shall provide the following construction services (the "Services") [Services Placement]: [Selected Services]. Additional services: [Additional Services].
Work Site. The Services shall be provided at the Client’s property located at [Site Address], [Site City], [Site Province] [Site Postal Code] (the "Work Site"). The Client shall grant the Contractor safe and unrestricted access to the Work Site while the Services are performed.
EQUIPMENT AND MATERIALS. The Contractor shall supply the equipment and tools necessary to perform the Services. The [Materials Responsibility] is responsible for providing the required materials for rendering the Services. The Client agrees to reimburse the Contractor for the actual cost of materials, supported by receipts or invoices submitted by the Contractor. The reimbursement for materials expenses shall be made within [Reimbursement Days] days of receiving valid receipts or invoices from the Contractor. All amounts are stated exclusive of applicable GST/HST, which shall be added and remitted by the Contractor in accordance with the Excise Tax Act (Canada).
SCHEDULE OF WORK. The Contractor shall commence on [Commencement Date] (the "Commencement Date"), and the Services shall be provided in full no later than [Completion Date] (the "Completion Date"). The Completion Date may be extended upon mutual written agreement between the Parties.
RIGHTS AND RESPONSIBILITIES OF THE PARTIES. The Contractor is responsible for maintaining the Work Site in a safe, clean, and orderly condition in compliance with applicable provincial occupational health and safety legislation. Upon completion of the Services, the Contractor shall ensure thorough cleaning of the Work Site and proper disposal of any debris in accordance with municipal bylaws.
The Contractor shall be entitled to reasonable breaks and rest periods as required by applicable provincial employment standards legislation. The Client shall allow an appropriate duration for meal breaks.
The Client shall provide the Contractor with all necessary information and documentation connected with performing the Services, including but not limited to plans, drawings, and specifications.
QUALITY CHECK AND ACCEPTANCE. Upon completion of the Services, the Client shall have [Inspection Days] days to inspect and assess the results to ensure they meet industry standards and the requirements outlined in this Contract. If deficiencies or deviations are identified during the inspection, the Contractor shall complete all necessary corrections within [Correction Days] days and at no additional cost to the Client. After the inspection and required corrections, the Client shall provide written notice of acceptance to the Contractor. The Services shall be deemed accepted if the Client fails to provide a written notice of defects within the specified period.
PAYMENT TERMS AND PROCEDURE. The compensation structure is [Payment Option]. In consideration of the Services, the Client shall pay the Contractor the fixed fee of CAD $[Fixed Fee] plus applicable GST/HST (the "Price"). The payment shall be made [Payment Schedule].
Statutory Holdback. In accordance with the applicable provincial construction lien legislation, the Client shall retain [Holdback Percentage]% of each progress payment or the total Price as a statutory holdback. The holdback shall be released after the expiry of the applicable lien period, which is [Holdback Days] days following the date of substantial completion of the Services, provided no construction lien has been registered against the property.
The Client shall pay the Contractor by [Payment Method].
Banking Details — Client: [Client’s Bank Name], account [Client’s Account Number]. Contractor: [Contractor’s Bank Name], account [Contractor’s Account Number].
PERMITS. The [Permits Responsibility] shall be responsible for obtaining all required permits, licences, and approvals necessary for the performance of the Services, including but not limited to building permits, zoning permits, and any other applicable municipal or provincial authorisations.
The Contractor assures the possession of all necessary permits, licences, and authorisations required to provide the Services and confirms compliance with all applicable federal, provincial, and municipal laws and regulations.
TERM OF THE CONTRACT AND DEFAULT. This Contract shall commence on the Effective Date and shall continue until [Completion Date] but not before the Parties fulfil their obligations under the Contract unless terminated earlier following the terms of this Contract.
Either Party may terminate this Contract without cause upon [Termination Notice Days] days’ written termination notice.
The Client may immediately terminate this Contract by giving written notice to the Contractor if the Services are not provided within the agreed-upon time, if the Contractor refuses or fails to provide an adequate number of skilled workers when necessary, or if the Contractor consistently disregards applicable laws, building codes, or safety standards.
The Contractor may immediately terminate this Contract by giving written notice to the Client in the event of the Client’s failure to make timely payments, denial of access to the Work Site, or failure by the Client to provide all necessary information and documentation essential for carrying out the Services, including but not limited to plans, drawings, and specifications.
In addition, either Party may terminate this Contract immediately upon written notice to the other Party if the other Party becomes insolvent, makes an assignment for the benefit of creditors, or files for protection under the Bankruptcy and Insolvency Act (Canada) or the Companies’ Creditors Arrangement Act.
Upon termination of this Contract, the Client shall pay the Contractor for all Services satisfactorily provided by the Contractor through the date of termination, less the statutory holdback and any amounts due from the Contractor to the Client.
CONSTRUCTION LIEN RIGHTS. Nothing in this Contract shall be construed as a waiver of any lien rights available to the Contractor under the applicable provincial construction lien legislation, including but not limited to the Construction Act (Ontario), the Builders Lien Act (British Columbia), the Builders’ Lien Act (Alberta), or the legal hypothec provisions of the Civil Code of Québec (art. 2726). The Contractor shall have the right to register a construction lien against the property if amounts owing under this Contract remain unpaid in accordance with the applicable statutory requirements.
RELATIONSHIP OF PARTIES. The Parties agree that their relationship under this Contract is that of independent parties. The Contractor is not an employee of the Client, and nothing in this Contract shall be interpreted as creating an employer-employee relationship. The Contractor is responsible for all statutory remittances, including but not limited to Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax.
WARRANTIES. The Parties represent and warrant that they have full right, power, and authority to enter into and perform this Contract, ensuring that its execution has been duly authorised by all necessary actions.
The Contractor guarantees that the Services provided meet all applicable federal and provincial requirements, including the National Building Code of Canada, provincial building codes, consumer protection laws, and industry standards. Where the work constitutes a new home in Ontario, the Contractor shall comply with the Ontario New Home Warranties Plan Act and be registered with Tarion Warranty Corporation as applicable.
Either Party may change its registered mail or email address for receipt of notices by giving written notice to the other Party. All notices shall be deemed received on the day of delivery if sent by hand or courier service or on the third business day after the date of posting if sent by registered mail or email.
GOVERNING LAW AND DISPUTE RESOLUTION. This Contract shall be governed by and interpreted in accordance with the laws of the Province of [Governing Law] and the federal laws of Canada applicable therein. Any disputes arising out of or in connection with this Contract shall be resolved by the courts of competent jurisdiction in the Province of [Governing Law]. Before commencing court proceedings, the Parties agree to attempt to resolve any dispute through good faith negotiation and, where required by applicable provincial legislation, through the adjudication process established under the applicable construction legislation.
SEVERABILITY. The invalidity or unenforceability of any provision of this Contract shall not affect the validity or enforceability of any other provision of this Contract.
ASSIGNMENT. Neither Party may assign or transfer this Contract without the prior written consent of the non-assigning Party, which approval shall not be unreasonably withheld.
ENTIRE AGREEMENT. This Contract is the complete and exclusive agreement between the Parties with respect to the subject matter hereof, superseding any prior agreements and communications, both written and oral, regarding such subject matter.
WAIVER. The failure of any Party to enforce a particular provision of this Contract shall not constitute a waiver of their right to enforce that provision in the future.
AMENDMENTS. This Contract may only be modified, or any rights under it waived, by a written document executed by both Parties.
BINDING EFFECT. This Contract shall be binding for the Parties and their respective permitted successors and assigns.
IN WITNESS WHEREOF, the Parties have signed this Contract as of the Effective Date.
THE CLIENT
[Client’s Name]
[Client’s Address], [Client’s City], [Client’s Province] [Client’s Postal Code], Canada
THE CONTRACTOR
[Contractor’s Name]
[Contractor’s Address], [Contractor’s City], [Contractor’s Province] [Contractor’s Postal Code], Canada
Party 1
________________
Signature
Date: ________________
Party 2
________________
Signature
Date: ________________
What Is a Construction Contract (Canada)?
A Construction Contract in Canada sets the scope, price, schedule, and risk allocation for construction work between owner and contractor, governed primarily by provincial construction and lien legislation.
The defining feature of Canadian construction law is the statutory holdback obligation. Most provinces require the owner to hold back 10% of each progress payment for a specified period — 60 days in Ontario, 55 days in British Columbia, 45 days in Alberta — to create a fund from which unpaid subcontractors and suppliers can make claims. An owner who releases the holdback before the lien period expires becomes personally liable to lienholders for the amount improperly released.
Ontario's 2018 Construction Act amendments introduced prompt payment provisions (Part I.1) that mandate a strict payment timeline — the owner must pay the general contractor within 28 days of receiving a proper invoice, and the general contractor must pay subcontractors within 7 days of receiving payment. Disputes about payment amounts are adjudicated through mandatory interim adjudication, a fast-track dispute resolution process that produces binding interim decisions within approximately 46 days. The federal Prompt Payment for Construction Work Act (S.C. 2019, c. 29, s. 369) applies similar requirements to federal construction projects. Workplace safety compliance is mandatory on Canadian construction sites. The Occupational Health and Safety Act 1990 (Ontario), Section 25 imposes duties on constructors (general contractors) to take every precaution reasonable to protect workers. Under Section 26 of the Occupational Health and Safety Act 1990, supervisors must advise workers of hazards and ensure compliance with safety regulations. The Occupational Health and Safety Regulation 2004 (BC), Part 20 governs construction safety standards in BC. Alberta's Occupational Health and Safety Act 2017, Section 3 requires employers to maintain a written health and safety program on worksites with 20 or more workers. Workers' compensation obligations fall under the Workplace Safety and Insurance Act 1997 (Ontario), the Workers Compensation Act 2019 (BC), and the Workers' Compensation Act 2000 (Alberta). The Income Tax Act 1985, Section 9 governs reporting of construction contract proceeds as business income, and the Excise Tax Act 1985, Section 165 requires GST/HST collection on construction services — currently 5% federal plus 8% Ontario provincial component (13% HST) or 7% BC provincial component (12% HST). New home construction may qualify for the New Residential Rental Property Rebate under Section 256 of the Excise Tax Act 1985. The Construction Act 1990 (Ontario), Section 1 defines key terms — substantial performance, subcontractor, and owner — that determine when the lien period begins and who may register a lien against the property title held by the Land Registry Office.
When Do You Need a Construction Contract (Canada)?
A Canadian Construction Contract is needed for any construction project — residential renovations, commercial build-outs, industrial construction, or infrastructure development. Homeowners hiring a contractor for a kitchen renovation, basement finishing, or roof replacement need a written contract that specifies the scope of work, materials, timeline, and price before any work begins. Without a written contract, disputes about what was included in the quoted price, whether additional work was authorized, and when the project was supposed to be completed become nearly impossible to resolve.
General contractors engaging subcontractors — electricians, plumbers, HVAC technicians, drywallers, framers, roofers — need subcontract agreements that reference the prime contract's terms, flow down lien holdback requirements, and include workers' compensation clearance certificate obligations. The contract must address who supplies materials, who obtains building permits, and who carries builder's risk insurance.
Commercial landlords funding tenant improvement projects, condominium corporations commissioning common area renovations, and developers building new residential or commercial properties all require construction contracts that comply with provincial construction lien legislation. Government and institutional projects funded by public money may require compliance with public procurement rules and bonding requirements.
Without a proper construction contract, the owner has no mechanism to enforce the schedule, quality standards, or budget. The contractor has no protection against scope creep, withheld payments, or unilateral project changes. Both parties lose the structured dispute resolution process that a well-drafted contract provides. Parties in Canada should execute a written construction contract before any work begins — Ontario courts and the BC Supreme Court consistently hold that oral construction agreements are difficult to enforce, particularly regarding scope inclusions and price. The Limitations Act 2002 (Ontario), Section 4 imposes a two-year basic limitation period on construction contract claims, running from the date the claimant first knew of the claim. Under Section 31 of the Construction Act 1990 (Ontario), a construction lien must be preserved within 60 days of the last supply of services or materials — making timely documentation of project completion dates critical. The Public Works Act 2000 (Alberta) and Public Works Protection Act 1990 (Ontario) impose additional requirements on publicly funded construction projects, including bonding requirements under Section 2 of the Public Works Act 2000.
What to Include in Your Construction Contract (Canada)
A thorough Canadian Construction Contract must identify the owner and contractor with full legal names, addresses, and business registration numbers. The scope of work must be described in detail — either through a specification schedule, drawings, or a detailed written description. Include the contract type: fixed price (lump sum), cost-plus (with a defined markup percentage or management fee), unit price, or time and materials.
The contract price in Canadian dollars must be clearly stated, along with the payment schedule — typically tied to progress milestones or monthly progress claims. The statutory holdback clause must comply with provincial requirements — 10% holdback in Ontario for the applicable lien period (60 days from substantial completion or last supply, whichever is later). In Ontario, include prompt payment terms compliant with the Construction Act Part I.1 — 28-day payment from proper invoice submission.
The change order process must be defined — how changes to the scope, price, or schedule are requested, approved, priced, and documented. Without a clear change order procedure, disputes about authorized extras are the single most common source of construction litigation. Include the project timeline with start date, milestone dates, and substantial completion date, along with liquidated damages for delay (if applicable).
Workers' compensation compliance is critical — the contract should require the contractor to maintain WSIB (Ontario), WorkSafeBC (British Columbia), or WCB (Alberta) coverage and provide clearance certificates before commencing work and before each progress payment. Insurance requirements should include commercial general liability (minimum $2-5 million), builder's risk insurance, and professional liability for design-build projects. Include a dispute resolution clause — mandatory adjudication (in Ontario), arbitration, or litigation — and a governing law clause referencing the applicable province. Under Section 22 of the Construction Act 1990 (Ontario), the statutory holdback clause must specify the 10% holdback rate, the lien period duration (60 days in Ontario, 55 days in BC under the Builders Lien Act 1997, Section 4, or 45 days in Alberta under the Builders' Lien Act 2000, Section 18), and the conditions for holdback release. Environmental compliance provisions should address the Environmental Protection Act 1990 (Ontario) and the Environmental Management Act 2003 (BC) — contractors must handle hazardous materials (asbestos, lead paint, contaminated soil) in accordance with provincial environmental regulations and obtain required permits from the Ontario Ministry of the Environment or BC Ministry of Environment. The contract should specify GST/HST treatment under the Excise Tax Act 1985, Section 165, and whether the stated contract price is inclusive or exclusive of tax.
Subcontractor obligations should include requirements to comply with the Occupational Health and Safety Act 1990 (Ontario), Section 25 and equivalent provincial health and safety legislation. The contract should address the handling of site deficiencies — a deficiency list prepared at substantial completion triggers the owner's right to withhold the cost of remediation under Section 2 of the Construction Act 1990. The Ontario New Home Warranties Plan Act 1990, administered by Tarion Warranty Corporation, imposes mandatory warranty obligations on builders of new homes — one-year workmanship warranty, two-year systems warranty, and seven-year structural warranty under Section 13. Contracts involving public infrastructure must also address bonding requirements: a performance bond and labour and material payment bond, each for 50% of the contract value, are standard requirements under federal and provincial public works procurement policies. Forms-legal.com provides this template as a starting point for Canada-compliant construction documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Construction Contract (Canada) (Canada) [Legal document template]. Forms Legal. https://forms-legal.com/canada/business/construction/construction-contract-canada
"Construction Contract (Canada) (Canada)." Forms Legal, 2026, https://forms-legal.com/canada/business/construction/construction-contract-canada.
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title = {Construction Contract (Canada) (Canada)},
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howpublished = {\url{https://forms-legal.com/canada/business/construction/construction-contract-canada}},
note = {Free legal document template. Based on Canada Business Corporations Act (R.S.C. 1985, c. C-44)}
}Also available for these jurisdictions:
Frequently Asked Questions
Canadian construction law mandates a statutory holdback — a mandatory deduction from each progress payment held to protect subcontractors and suppliers. Under Section 22 of the Construction Act 1990 (Ontario), the owner must withhold 10% of each progress payment until the expiry of the lien period, which runs 60 days from publication of a Certificate of Substantial Performance in a construction trade newspaper. If the owner releases the holdback early, Section 35 of the Construction Act 1990 makes the owner personally liable to lienholders for the improperly released amount. British Columbia's Builders Lien Act 1997, Section 4 requires a 10% holdback held for 55 days from substantial completion. Alberta's Builders' Lien Act 2000, Section 18 requires a 10% holdback for 45 days. The holdback must be maintained in a separate trust account under Section 8 of the Construction Act 1990 (Ontario). Subcontractors can register a claim for lien against the holdback fund using the province's lien registration system — in Ontario, through the Land Registry Office under Section 34 of the Construction Act 1990. The construction contract should expressly reference the holdback obligation, specify how progress claims trigger holdback calculations, and confirm the release conditions.
Prompt payment legislation has fundamentally changed payment obligations in Canadian construction. Ontario's Construction Act 1990, Part I.1 (added by Bill 142 in 2018) mandates that owners pay general contractors within 28 days of receiving a proper invoice, and general contractors must pay subcontractors within 7 days of receiving payment from the owner. If the owner disputes the invoice, they must serve a Notice of Non-Payment under Section 6.4 of the Construction Act 1990 within 14 days. Undisputed amounts must still be paid on time — failure triggers the contractor's right to suspend work under Section 6.6 and initiate mandatory interim adjudication under Part I.3 of the Act. The federal Prompt Payment for Construction Work Act 2019, Section 2 applies to construction contracts on federal real property and federal Crown corporations, requiring payment within 28 days of a proper invoice. BC's Builders Lien Act 1997 and Alberta's Builders' Lien Act 2000 do not yet have equivalent prompt payment provisions, though both provinces have discussed legislation. Saskatchewan's Builders' Lien Act 2019 introduced prompt payment obligations effective 2022. Manitoba's The Builders' Liens Act 2022 similarly introduced 28-day payment requirements. Construction contracts should incorporate prompt payment timelines to ensure compliance with provincial requirements.
Workers' compensation clearance certificates are a critical compliance requirement in Canadian construction. Under Section 141 of the Workplace Safety and Insurance Act 1997 (Ontario), a principal contractor (general contractor) who fails to obtain a WSIB clearance certificate from a subcontractor becomes liable for the subcontractor's unpaid WSIB premiums. The Workplace Safety and Insurance Board (WSIB) issues clearance certificates confirming a subcontractor is registered and current with premium payments. In British Columbia, Section 257 of the Workers Compensation Act 2019 imposes the same liability on principal contractors who fail to obtain WorkSafeBC clearance certificates from subcontractors. Alberta's Workers' Compensation Act 2000, Section 93 makes a general contractor liable for WCB premiums of unregistered or non-compliant subcontractors. The construction contract should require subcontractors to provide WSIB, WorkSafeBC, or WCB clearance certificates as a condition of commencement and as a condition of each progress payment. Clearance certificates must be current at the time of payment — a certificate issued before work began may be expired by the time a progress draw is requested. The Ontario WSIB clearance portal, WorkSafeBC's online clearance letter system, and Alberta WCB's clearance certificate service all provide real-time certificate verification for general contractors.
A Construction Contract (Canada) does not legally require a lawyer in Canada, and individuals and businesses may draft and execute the document independently. The Canada Business Corporations Act (R.S.C. 1985, c. C-44) does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified Canada lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Federal Court of Canada has jurisdiction over disputes arising from this type of document, and Corporations Canada may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
A Construction Contract (Canada) does not legally require a lawyer in Canada, though legal advice is recommended for complex transactions. Under Canadian law, individuals may draft and execute this type of document independently. The Competition Act (R.S.C. 1985, c. C-34) provides consumer protections. However, Corporations Canada, the Canada Revenue Agency (CRA), or provincial regulatory bodies may have specific requirements. For property transactions, provincial land title offices require qualified lawyers or notaries. PIPEDA and provincial privacy legislation impose obligations on parties handling personal data. Where disputes arise, provincial superior courts or the Federal Court of Canada have jurisdiction. Forms-legal.com provides this template as a starting point — always review with a qualified Canadian lawyer for significant transactions.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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