Building Contract (UK)
This Building Contract (the “Contract”) is entered into on [Contract Date] by and between:
[Employer Name], with address at [Employer Address], [Employer City], [Employer Postcode], England (hereinafter referred to as the “Employer”); and
[Contractor Name], with address at [Contractor Address], [Contractor City], [Contractor Postcode], England (hereinafter referred to as the “Contractor”).
The Employer and the Contractor are referred to collectively as the “Parties” and individually as a “Party”.
BACKGROUND
A. The Employer wishes to commission building works at the property situated at [Site Address], [Site City], [Site Postcode], England and Wales (the “Site”).
B. The Contractor has agreed to carry out and complete the Works in accordance with the terms and conditions of this Contract.
C. The Parties intend this Contract to comply with the requirements of the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009), the Construction (Design and Management) Regulations 2015, the Building Safety Act 2022, and the Defective Premises Act 1972.
NOW, THEREFORE, in consideration of the mutual obligations set out below and for good and valuable consideration, the Parties agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Contract, the following terms shall have the meanings set out below:
- “Contract Documents” means this Contract together with any drawings, specifications, schedules, and bills of quantities attached hereto or incorporated by reference.
- “Contract Sum” has the meaning given in clause 4.1.
- “Defects Liability Period” means the period specified in clause 7.1 during which the Contractor is obliged to remedy defects.
- “Practical Completion” means the state at which the Works are complete for all practical purposes, allowing the Employer to take possession of the Site, notwithstanding minor outstanding items that do not affect the use or enjoyment of the Works.
- “Site” means the land and property at which the Works are to be carried out, as described in clause 2.
- “Works” means the building and associated works described in clause 3.
2. THE SITE
2.1 The Works shall be carried out at the Site located at: [Site Address], [Site City], [Site Postcode], England and Wales.
2.2 The Employer shall give the Contractor access to the Site on or before the Commencement Date and shall maintain such access throughout the period of the Works.
3. THE WORKS
3.1 The Contractor shall carry out and complete the following building works (the “Works”) in a good and workmanlike manner, using materials of satisfactory quality, in accordance with this Contract and all applicable laws and regulations:
[Works Description]
3.2 The Contractor shall comply with all applicable Building Regulations made under the Building Act 1984 and any amendments, including but not limited to the Building Regulations 2010 (SI 2010/2214), and shall obtain all necessary approvals, notices, and consents at its own cost unless otherwise agreed in writing.
3.3 The Contractor shall carry out the Works in accordance with the Construction (Design and Management) Regulations 2015 (CDM 2015) and shall comply with its duties as Principal Contractor (if so designated) or as a Contractor under those Regulations.
3.4 The Contractor shall take all reasonable steps to minimise disruption to neighbouring properties and to comply with any conditions attached to any planning permission granted for the Works.
3.5 The Works shall comply with the Defective Premises Act 1972 and shall be fit for the purpose for which the Employer intends them to be used, as indicated in this Contract.
4. CONTRACT SUM AND PAYMENT
4.1 In consideration of the Contractor carrying out and completing the Works, the Employer shall pay the Contractor the sum of £[Contract Sum] ([Vat Included]) (the “Contract Sum”), subject to any adjustments permitted under this Contract.
4.2 The Contract Sum shall be paid in accordance with the following payment schedule:
[Payment Schedule]
4.3 Payment Notices (HGCRA 1996 Compliance): The Employer shall issue a Payment Notice not later than [Payment Notice Days] days after each payment due date, specifying the sum that the Employer considers to be due and the basis on which that sum is calculated, in accordance with section 110A of the Housing Grants, Construction and Regeneration Act 1996.
4.4 The final date for payment of each instalment shall be [Final Payment Days] days after the payment due date. If the Employer intends to pay less than the notified sum, the Employer shall issue a Pay Less Notice not later than 5 days before the final date for payment, specifying the sum that the Employer considers due and the grounds for paying less.
4.5 If the Employer fails to pay any sum by the final date for payment and has not issued a valid Pay Less Notice, the Contractor may give written notice of the Contractor’s intention to suspend performance of the Works pursuant to section 112 of the HGCRA 1996. The Contractor may suspend after giving 7 days’ notice.
4.6 Late payment interest shall accrue on any overdue amount at the rate of 8% per annum above the Bank of England base rate, pursuant to the Late Payment of Commercial Debts (Interest) Act 1998.
5. PROGRAMME AND COMPLETION
5.1 The Contractor shall commence the Works on [Commencement Date] and shall regularly and diligently proceed with the Works thereafter.
5.2 The Contractor shall achieve Practical Completion by [Completion Date] (the “Date for Completion”), subject to any extension of time granted under clause 6.3.
5.3 If completion of the Works is delayed by any cause beyond the Contractor’s reasonable control, including but not limited to exceptionally adverse weather conditions, delay by statutory undertakers, or Employer-caused delay, the Contractor shall be entitled to apply in writing for an extension of time. Any extension shall be agreed in writing by both Parties.
6. PRACTICAL COMPLETION AND DEFECTS
6.1 On Practical Completion, the Employer shall issue a written notice of Practical Completion. The Defects Liability Period shall be [Defects Period] from the date of Practical Completion.
6.2 During the Defects Liability Period, the Employer shall notify the Contractor in writing of any defects, shrinkages, or other faults that appear in the Works and are due to the Contractor’s breach of this Contract or to materials or workmanship not in accordance with this Contract.
6.3 The Contractor shall, at its own cost, make good all notified defects within a reasonable time. If the Contractor fails to do so within 30 days of notification, the Employer may employ others to make good such defects at the Contractor’s reasonable cost.
6.4 Nothing in this clause limits the Contractor’s liability for latent defects under the Defective Premises Act 1972 or the Limitation Act 1980, which may extend to 6 years (or 12 years if under deed) for claims in contract and to the date of reasonable discovery for latent defects in negligence.
6.5 The Building Safety Act 2022 imposes additional obligations in relation to higher-risk buildings and the building safety regime. Where the Works relate to a higher-risk building (as defined in the 2022 Act), the Contractor shall comply with all additional duties imposed under that Act.
7. INSURANCE
7.1 The Contractor shall, prior to commencing the Works and throughout the period of the Works, take out and maintain the following insurance policies with reputable insurers authorised in the United Kingdom:
- Public liability insurance: not less than £[Insurance Amount] in respect of any one occurrence or series of occurrences arising from one cause;
- Employers’ liability insurance: as required by the Employers’ Liability (Compulsory Insurance) Act 1969, with a minimum limit of £5,000,000 per occurrence;
- Contractors’ all risk insurance (if applicable): covering the full reinstatement value of the Works and materials on Site.
7.2 The Contractor shall, if requested by the Employer, produce evidence of such insurance policies and confirmation of premium payment before or at any time during the Works.
8. VARIATIONS
8.1 The Employer may instruct variations to the Works in writing. No variation shall vitiate this Contract.
8.2 The value of any variation shall be agreed in writing by both Parties before the variation is carried out, where reasonably practicable. Where prior agreement is not possible, the valuation shall be carried out on a fair and reasonable basis having regard to the rates and prices in this Contract.
8.3 The Contract Sum shall be adjusted accordingly to reflect agreed variations, whether additions or omissions.
9. DISPUTE RESOLUTION — ADJUDICATION
9.1 Either Party has the right to refer any dispute arising under or in connection with this Contract to adjudication at any time, pursuant to section 108 of the Housing Grants, Construction and Regeneration Act 1996.
9.2 The adjudicator shall be a person agreed between the Parties, or in default of agreement, a person nominated by [Adjudication Body].
9.3 The adjudicator shall reach a decision within 28 days of referral (or such longer period as may be agreed). The adjudicator’s decision shall be binding on the Parties until the dispute is finally determined by litigation, arbitration, or agreement.
9.4 All disputes or differences not resolved by adjudication shall be determined by the courts of England and Wales.
10. TERMINATION
10.1 Either Party may terminate this Contract forthwith by written notice if the other Party:
- becomes insolvent, enters into administration, receivership, or liquidation (other than for the purposes of a solvent reconstruction);
- commits a material breach of this Contract that is irremediable; or
- commits a material breach that is capable of remedy but fails to remedy it within 14 days of receiving written notice requiring it to do so.
10.2 The Employer may also terminate this Contract on 14 days’ written notice for convenience. In such event, the Contractor shall be entitled to payment for all Works properly executed to the date of termination, plus reasonable costs of demobilisation, but shall not be entitled to loss of profit on the uncompleted Works unless such termination is not genuine.
11. GENERAL PROVISIONS
11.1 Health and Safety: The Contractor shall comply with all applicable health and safety legislation, including the Health and Safety at Work etc. Act 1974, the Management of Health and Safety at Work Regulations 1999, and CDM 2015.
11.2 Assignment: Neither Party may assign, transfer, or subcontract this Contract or any rights or obligations under it without the prior written consent of the other Party, such consent not to be unreasonably withheld.
11.3 Notices: All notices under this Contract shall be in writing and delivered by hand, first-class post, or email (with read receipt) to the addresses specified in this Contract.
11.4 Entire Agreement: This Contract constitutes the entire agreement between the Parties relating to the Works and supersedes all prior negotiations, representations, and agreements relating to the same subject matter.
11.5 Severability: If any provision of this Contract is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
11.6 Third Party Rights: A person who is not a party to this Contract shall have no right to enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.
11.7 Governing Law and Jurisdiction: This Contract and any dispute or claim arising out of or in connection with it shall be governed by and construed in accordance with the laws of England and Wales. Each Party submits to the exclusive jurisdiction of the courts of England and Wales.
IN WITNESS WHEREOF the Parties have executed this Building Contract as of the date first written above.
THE EMPLOYER
Full name: [Employer Name]
Address: [Employer Address], [Employer City], [Employer Postcode]
THE CONTRACTOR
Full name: [Contractor Name]
Address: [Contractor Address], [Contractor City], [Contractor Postcode]
Employer
________________
Signature
Date: ________________
Contractor
________________
Signature
Date: ________________
What Is a Building Contract (UK)?
A Building Contract in the United Kingdom sets the scope of works, price, programme, and payment terms for the building or installation project, under the framework of the Construction and Regeneration Act 1996.
Building contracts in England and Wales are primarily governed by the common law of contract, supplemented by a significant body of construction-specific legislation. The most important statute is the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), as amended by the Local Democracy, Economic Development and Construction Act 2009. The HGCRA 1996 implies mandatory payment and adjudication rights into any 'construction contract' as defined by the Act. Most construction projects — from a single residential extension to a major commercial development — will be caught by the Act's provisions.
Other legislation affecting building contracts in England and Wales includes the Construction (Design and Management) Regulations 2015 (CDM 2015), which impose health and safety management duties on clients, designers, and contractors; the Building Safety Act 2022, which introduced new building safety obligations particularly for higher-risk buildings; the Defective Premises Act 1972, under which a contractor who does work in connection with a dwelling owes a duty to the eventual owner to confirm the work is done in a workmanlike or professional manner; and the Health and Safety at Work etc. Act 1974.
Standard form building contracts — such as the JCT (Joint Contracts Tribunal) suite and the NEC Engineering and Construction Contract — are widely used in England and Wales. Our UK Building Contract template provides a balanced, legally compliant framework that incorporates the key statutory requirements and covers the essential provisions needed for straightforward construction projects, including residential extensions, commercial refurbishments, and new build projects of modest scale.
The legal framework governing the Building Contract (UK) in United Kingdom draws on several key statutes and regulatory bodies. Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Parties executing a Building Contract (UK) in United Kingdom should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2006 sets the foundational requirements.
When Do You Need a Building Contract (UK)?
A Building Contract is necessary for virtually any construction project of substance. It is strongly advisable — and in many cases essential — to have a written building contract in place before any works begin on site, regardless of the scale of the project.
You should use a Building Contract when commissioning: a new residential house or development; a single or double-storey extension to an existing house or commercial property; a loft conversion or basement conversion; a commercial fit-out or refurbishment; demolition and rebuild works; structural alterations to an existing building; civil engineering works such as groundworks, drainage, or roads; or any other building project where the contract sum is significant.
A written building contract is particularly important because: it establishes the scope of works agreed, preventing disputes about what is and is not included in the price; it sets a clear programme, giving the employer a remedy in liquidated damages if the contractor is late; it allocates the risk of unexpected site conditions, design changes, and force majeure events between the parties; it specifies the quality standards expected (materials of satisfactory quality, workmanship with reasonable care and skill); it protects both parties if the other becomes insolvent during the project; and it provides a clear dispute resolution mechanism — particularly the statutory right to adjudication under the HGCRA 1996, which is often quicker and cheaper than litigation.
Without a written contract, the terms of the agreement between employer and contractor will be determined by reference to any written quotations, emails, and oral discussions — a situation that inevitably leads to uncertainty and dispute. The courts of England and Wales will imply terms into a construction contract where necessary, but this is an expensive and uncertain process compared to having clear written terms from the outset.
What to Include in Your Building Contract (UK)
A well-drafted Building Contract for use in England and Wales must include several key provisions that together provide a clear, enforceable framework for the construction project.
The scope of works clause is fundamental: it should describe the works to be carried out with sufficient particularity to prevent disputes about what is included in the contract price. It is best practice to attach a detailed specification and any drawings to the contract. The works description should also make clear which statutory consents and approvals (planning permission, Building Regulations) are included in the contractor's scope.
The payment provisions are the most legally regulated aspect of a building contract under the HGCRA 1996. The contract must specify an adequate mechanism for determining the sums due, when they become due, and the final date for payment. It must also specify the procedure for Payment Notices (which the employer must issue within a specified number of days of each payment due date) and Pay Less Notices (which the employer must issue before the final date for payment if it intends to pay less than the notified sum). Failure to issue a valid Pay Less Notice means the employer must pay the full sum in the Payment Notice, regardless of any dispute.
The liquidated damages clause allocates the risk of delay to the contractor. It should specify a rate expressed per week or per day that represents a genuine pre-estimate of the employer's losses in the event of delay. The contract must also contain an extension of time mechanism giving the contractor relief from liquidated damages where delay is caused by employer risk events.
The defects liability period (typically 6 or 12 months after practical completion) obliges the contractor to return and remedy any defects that appear during this period at its own cost. This is distinct from the contractor's ongoing liability for latent defects under the Limitation Act 1980 and the Defective Premises Act 1972.
The adjudication clause must comply with section 108 of the HGCRA 1996, granting either party the right to refer any dispute to adjudication at any time. The contract should specify a nominating body (such as the RICS or CIArb) in case the parties cannot agree on an adjudicator. The adjudicator's decision is binding unless and until revised by arbitration or litigation.
Additional compliance elements for a Building Contract (UK) used in United Kingdom include: Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Forms-legal.com provides this template as a starting point for United Kingdom-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Building Contract (UK) (United Kingdom) [Legal document template]. Forms Legal. https://forms-legal.com/uk/business/contracts/building-contract-uk
"Building Contract (UK) (United Kingdom)." Forms Legal, 2026, https://forms-legal.com/uk/business/contracts/building-contract-uk.
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title = {Building Contract (UK) (United Kingdom)},
year = {2026},
howpublished = {\url{https://forms-legal.com/uk/business/contracts/building-contract-uk}},
note = {Free legal document template. Based on Companies Act 2006}
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Frequently Asked Questions
The Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), as amended by the Local Democracy, Economic Development and Construction Act 2009, establishes mandatory payment and adjudication rights for most construction contracts in England and Wales. The Act requires every construction contract to include an adequate mechanism for determining what payments are due, when they become due, and the final date for payment. It also requires a mechanism for giving Payment Notices and Pay Less Notices, imposes a right to suspend work for non-payment on 7 days' notice, and grants either party the right to refer any dispute to adjudication at any time. If a construction contract does not comply with these requirements, the Scheme for Construction Contracts (England and Wales) Regulations 1998 is implied into the contract by statute. Our Building Contract template is drafted to comply with the HGCRA 1996 requirements.
The Construction (Design and Management) Regulations 2015 (CDM 2015) impose health and safety duties on all parties involved in a construction project, including clients, principal designers, principal contractors, designers, and contractors. For projects involving more than one contractor, the client must appoint a Principal Designer (to plan, manage, monitor, and coordinate the pre-construction phase) and a Principal Contractor (to plan, manage, monitor, and coordinate the construction phase) in writing. Both appointments must be made as early as possible. The client is responsible for ensuring that a Construction Phase Plan is prepared before the construction phase begins. Failure to comply with CDM 2015 can result in enforcement action by the Health and Safety Executive and may also affect the client's ability to enforce the building contract. Our template includes provisions addressing CDM 2015 duties.
Practical completion is the point at which the works are sufficiently complete for the employer to take possession of the site and use the building for its intended purpose, even if there are minor outstanding items (sometimes called a 'snagging list') that do not affect the use or enjoyment of the building. The legal consequences of practical completion are significant: the employer's obligation to insure the works typically passes to the contractor's all-risk policy; the defects liability period commences; the contractor's right to an extension of time generally ends; and one half of the retention fund is typically released. Final completion occurs at the end of the defects liability period, once all notified defects have been made good, and triggers release of the remaining retention. The distinction matters because liquidated damages for delay stop accruing at practical completion, and the limitation period for bringing a claim in contract begins to run from practical completion.
Adjudication is a statutory dispute resolution procedure available to any party to a construction contract under section 108 of the Housing Grants, Construction and Regeneration Act 1996. Either party may refer a dispute to adjudication at any time by serving a Notice of Adjudication. An adjudicator must be appointed within 7 days of the Notice of Adjudication, and the adjudicator must reach a decision within 28 days of the referral notice (extendable by 14 days with the referring party's consent, or by any period with both parties' consent). The adjudicator's decision is binding on the parties and must be complied with immediately. The decision can only be challenged by commencing arbitration or court proceedings to have the dispute finally determined — it cannot simply be ignored. Adjudication is deliberately fast and relatively informal, making it an effective mechanism for resolving cash-flow disputes during a project.
The Building Safety Act 2022 introduced the most significant reforms to building safety law in England in a generation, following the Grenfell Tower tragedy. The Act introduced a new regulatory regime for 'higher-risk buildings' (broadly, residential buildings over 18 metres or 7 storeys tall), including new dutyholder roles during design and construction, a Building Safety Regulator (operated by the Health and Safety Executive), gateway approvals at key stages of the design and construction process, and mandatory reporting obligations. For building contracts relating to higher-risk buildings, the Act imposes additional obligations on all those involved in the design and construction process, requiring them to comply with the 'building safety' objectives and to keep records of design and construction information as part of a 'golden thread' of information. The Act also extended the limitation period for claims under the Defective Premises Act 1972 from 6 years to 15 years (and applied retrospectively in some cases).
Liquidated damages (LDs) are a pre-agreed sum payable by the contractor for each day or week of culpable delay in achieving practical completion. They are a legitimate and common provision in UK construction contracts and are given effect by the JCT family of contracts, as well as bespoke contracts. Following the Supreme Court's decision in Cavendish Square Holding BV v Makdessi [2015] UKSC 67, liquidated damages provisions will be enforceable provided they represent a genuine pre-estimate of loss or can be commercially justified as protecting a legitimate interest — they need not be a precise calculation. To set an appropriate LD rate, the employer should consider the costs it would actually incur if completion were delayed, such as alternative accommodation costs, lost rental income, additional financing costs, or business disruption costs. The LD rate should be documented and the calculation methodology kept on record in case the clause is challenged.
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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