Construction Contract (Ghana)

A Construction Contract in Ghana is a legally binding written agreement between a property owner or employer and a contractor that governs the design, construction, renovation, or alteration of a building or civil engineering structure in accordance with the Contracts Act 1960 (Act 25) and applicable construction law in Ghana. The Construction Contract (Ghana) sets out the scope of works, contract price in Ghana Cedis (GHS), payment schedule, programme of works, variations procedure, defects liability obligations, and the circumstances under which either party may terminate the agreement.

The legal framework governing construction contracts in Ghana draws primarily on the Contracts Act 1960 (Act 25), which codifies the common law rules of offer, acceptance, consideration, and contractual capacity applicable to all binding agreements in Ghana. Construction contracts for public sector projects are additionally regulated by the Public Procurement Act 2003 (Act 663), which requires that public bodies follow the procurement processes administered by the Public Procurement Authority (PPA) before entering into any construction agreement above the prescribed threshold. The PPA publishes standard form contracts that public entities in Ghana are obligated to use for procurement of works.

In the private sector, the Ghana Institution of Engineering (GhIE) and the Ghana Institute of Architects (GIA) both publish standard form contracts widely used for building and civil engineering works in Ghana. Many sophisticated construction projects in Ghana — particularly those financed by international development finance institutions such as the World Bank, the African Development Bank (AfDB), or the European Investment Bank (EIB) — use FIDIC (Federation Internationale des Ingenieurs-Conseils) standard form contracts, which are internationally recognised and enforceable in Ghanaian courts.

The National Building Regulations 1996 (LI 1630) require that construction works in Ghana be carried out in accordance with approved building plans. Before commencing construction, the owner must obtain a Building Permit from the relevant District Assembly or Metropolitan Authority — such as the Accra Metropolitan Assembly (AMA) or the Kumasi Metropolitan Assembly (KMA). The Environmental Protection Agency (EPA) may also require an Environmental Impact Assessment (EIA) for large construction projects under the Environmental Assessment Regulations 1999 (LI 1652).

A Construction Contract in Ghana must be distinguished from a Consulting Agreement, which governs the services of an architect, engineer, or quantity surveyor providing professional advice rather than executing physical works, and from a Supply Agreement, which covers the provision of building materials without construction obligations. The Construction Contract is also distinct from a Sub-Contract Agreement, under which a main contractor delegates specific portions of the works to a specialist sub-contractor.

The Ghana Revenue Authority (GRA) treats construction contracts as taxable supplies for Value Added Tax (VAT) purposes under the Value Added Tax Act 2013 (Act 870), with VAT charged at the standard rate of 15% plus the National Health Insurance Levy (NHIL) of 2.5% and the Ghana Education Trust Fund Levy (GETFund) of 2.5%. Contractors registered with the Ghana Revenue Authority must include these levies in their contract prices and remit them to the GRA. Contractors are also required to register with the Ghana Revenue Authority and obtain a Tax Identification Number (TIN) before execution of any public sector construction contract.

A Construction Contract in Ghana is required whenever any party engages a contractor to carry out building, civil engineering, or infrastructure works, and is particularly important in the following circumstances.

A Construction Contract is required when a private individual, company, or government body in Ghana commissions the construction of a new residential or commercial building in any of Ghana's 16 administrative regions. Without a written contract, disputes over the scope of works, payment, and completion date are left to be determined by oral evidence, which Ghanaian courts treat as inherently unreliable.

A Construction Contract is needed when the project value exceeds GHS 20,000, as this threshold triggers significant documentation requirements under the Public Procurement Act 2003 (Act 663) for public sector projects, and any dispute of this magnitude will be heard by the High Court (Commercial Division) in Accra or the relevant regional High Court.

A Construction Contract is required for any construction project requiring a Building Permit from the Accra Metropolitan Assembly (AMA), the Kumasi Metropolitan Assembly (KMA), or any District Assembly in Ghana, because the Building Permit application process typically requires submission of contractual documentation.

A Construction Contract is needed when a developer in Ghana sells off-plan residential units and must demonstrate to purchasers that the construction programme is governed by binding contractual commitments with a reputable contractor, particularly where the development is marketed to members of the diaspora or to foreign investors.

A Construction Contract is required when the project is financed by a bank licensed by the Bank of Ghana (BoG), as lenders providing construction finance in Ghana require a copy of the executed construction contract before advancing drawdowns against the facility.

A Construction Contract is needed when engaging a contractor registered with the Ghana Contractors Association (GCA) for works covered by the National Building Regulations 1996 (LI 1630), to confirm that the contractual obligations align with the regulatory standards enforced by the Architectural and Engineering Services Limited (AESL) on behalf of government.

Parties in Ghana should execute a Construction Contract before any site mobilisation begins. Retrospective contracts are difficult to enforce in the High Court (Commercial Division), Accra, particularly where works have already been partially completed and the scope is in dispute.

A valid Construction Contract in Ghana under the Contracts Act 1960 (Act 25) must contain the following essential elements.

Parties and Background: Full legal names, addresses, and registration numbers of the owner and the contractor. If the contractor is a company incorporated under the Companies Act 2019 (Act 992), the contract should state the company's registration number issued by the Office of the Registrar of Companies (ORC). If the contractor is a sole trader or partnership, the contract should reference the relevant business registration.

Description of Works: A precise description of the construction works to be carried out, by reference to drawings, specifications, and a Bills of Quantities (BOQ) prepared by a certified quantity surveyor. The drawings and specifications should be appended to the contract or incorporated by reference. The description must identify the site address, the building type, and the approved Building Permit number issued by the relevant District Assembly.

Contract Price and Payment Schedule: The total contract price in Ghana Cedis (GHS), inclusive of all applicable taxes and levies — VAT at 15%, NHIL at 2.5%, and GETFund Levy at 2.5% — under the Value Added Tax Act 2013 (Act 870). The payment schedule should set out milestone payments tied to measurable stages of completion: mobilisation advance (typically 10-15% of contract price), upon completion of foundations, upon completion of roofing, upon completion of plastering and services, and upon practical completion. Interim payments must be supported by a payment certificate issued by the supervising engineer or architect.

Programme of Works: A detailed programme setting out the sequence and timing of the works, the contract completion date, and the number of calendar days allowed for completion. Provisions for extension of time should cover force majeure events, exceptional weather conditions, and employer-caused delays in accordance with Ghanaian construction practice.

Variations: A formal procedure for instructing and valuing variations to the scope of works. Variations must be instructed in writing by the owner or the supervising professional. No additional payment is due for works carried out without a written variation order.

Defects Liability: A defects liability period of at least 12 months following practical completion, during which the contractor is obliged to remedy any defects attributable to the contractor's workmanship or materials at no additional cost. A retention of 5-10% of the contract price is typically held back until expiry of the defects liability period.

Termination: Circumstances in which either party may terminate the contract, including employer termination for contractor default — such as persistent failure to proceed with diligence or insolvency — and contractor termination for non-payment extending beyond a specified grace period.

Dispute Resolution: A tiered dispute resolution mechanism providing for negotiation, followed by referral to the Ghana Arbitration Centre (GAC) for binding arbitration under the Alternative Dispute Resolution Act 2010 (Act 798), or litigation before the High Court (Commercial Division) in Accra. Forms-legal.com provides this template as a starting point for Ghana-compliant construction documentation.

Governing Law: Ghana law, with specific reference to the Contracts Act 1960 (Act 25), the Public Procurement Act 2003 (Act 663) where applicable, and the Alternative Dispute Resolution Act 2010 (Act 798). The contract should also reference the National Building Regulations 1996 (LI 1630) to confirm that all works will comply with the applicable building standards enforced by the relevant Metropolitan or District Assembly.

Additional compliance elements for a Construction Contract (Ghana) used in Ghana include: Under the Companies Act 2019 (Act 992), the Registrar General's Department (RGD) maintains the register of Ghanaian companies. Section 7 of the Companies Act 2019 governs company incorporation. The Ghana Revenue Authority (GRA) administers corporate tax under the Income Tax Act 2015 (Act 896). The Commercial Division of the High Court in Accra adjudicates business disputes. The Ghana Investment Promotion Centre (GIPC) regulates foreign investment under the GIPC Act 2013 (Act 865). Forms-legal.com provides this template as a starting point for Ghana-compliant documentation.