Contractor Agreement
Clauses & Role
A contractor agreement is an important document that ought to be prepared and signed before any project starts. It shows the relationship between the client and the sewer contractor, showing how much the client will pay for what amount of work done by the contractor.
The presence of the signatures of the contractor and the client indicate the document is legal and in case of a dispute, the matter can be taken for arbitration.
A standard contractor agreement form in Saudi Arabia will contain the following articles within its body:
Scope of Works:
This article defines the extent to which the works cover. Any changes in the works to be done will have to be agreed upon.Time of Completion: This article states the duration within which the works should be completed. A default in this will result in a penalty for the contractor.
Contract Price:
This is the value of the works, for which the client will pay the contractor inclusive of materials, provision of labor and the contractor's fee.
Progress Payments:
This article stipulates after which stages of work the contractor shall be paid. A certificate of payment is issued at each stage.
General Provisions:
This article normally puts across the modalities to be followed in case of any extra works to be done, what laws the contract is governed by, what happens in case of a breach and so forth.
There exist three key types of contractor agreement documents:
Lump sum Contracts:
This contract is a fixed–price contract, where a fixed amount of money is paid for a clearly defined scope of work.
Cost-Plus Contract:
In this contract, the client pays the contractor for his labor and material costs, plus a fixed fee or a percentage of the cost, above the construction cost.
Labor Contract:
In this contract agreement, the contractor only provides the source of labor, and is paid for this. The material cost is upon the client.
The descriptions above are only basic; you may need advice from a legal expert to tell you of other terms usually found in contract documents such as "arbitration," "indemnity," "breach of contract" and many others.
It is important to be clear from the contents of the contract before putting your signature on it. Once your signature is written on the document the terms contained in it become legally binding, meaning you can be taken to court if you go against any of the provisions of the contract.
...........SAMPLE CONTRACT AGREEMENT..........
This contract is entered by …………… (the Client) and …………….. (the Contractor) agreeing as follows:
ART. 1: SCOPE OF WORKS:
The Contractor is to perform the construction of a sewer as shown in the drawing and specification's documents (herein attached).
ART. 2: DATE OF COMPLETION:
The Contractor is to complete the works on or before the ….. day of …… 2012.
ART 3: CONTRACT PRICE:
The entire works, upon completion shall cost USD ……………… which is to be paid by the Client as agreed in this document.
ART 4: GENERAL PROVISIONS:
4.1 The total payment shall be issued upon completion. A consideration of 10% of the total price is to be paid in advance.
4.2 This contract is bound by time.
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