A construction contract is not simply a formality. It is the document that governs every aspect of your project: who is responsible for what, how disputes are resolved, and what happens when something goes wrong. For clients, understanding the key provisions of a construction contract is as important as any design decision. Here is what to look for before you sign.
Scope of Work
The scope of work is the beating heart of any contract. It should describe, in specific terms, what the contractor is and is not responsible for building. Vague language creates ambiguity later. For luxury projects in particular, the scope should be detailed enough that there is no question about what is included. With custom materials, specialty systems, and complex finishes, it is important to know who is doing what and how.
Payment Schedule and Retention
Construction contracts typically include a draw schedule: a series of progress-based payments tied to project milestones. Review this carefully. Understand when payments are due, what milestone must be reached to trigger each payment, and how retention (a percentage of payment withheld until project completion) is structured. Retention protects the owner; it ensures that the contractor has a financial stake in completing the work to satisfaction.
Change Order Procedures
In luxury construction, change orders are inevitable. Materials are substituted, designs evolve, unforeseen site conditions arise. A well-written contract will specify exactly how change orders are initiated, approved, priced, and documented. Verbal approvals are a recipe for disputes. Ensure that your contract requires all changes to be in writing and signed by both parties before work proceeds.
Schedule and Delay Provisions
The contract should include a project schedule with key milestones and a completion date. Equally important are the provisions governing delays; what constitutes an excusable delay (weather, material shortages, etc.) versus an inexcusable one, and what the consequences are in either case. For luxury clients who may be planning around a move or grand opening date, these provisions carry real financial stakes.
Dispute Resolution
Even with the best teams and intentions, disagreements can arise. Your contract should specify the mechanism for resolving them: mediation, arbitration, or litigation just to name a few. Each carries different implications for cost, timing, and privacy. For high-value luxury projects, many clients and contractors prefer arbitration for its relative speed and confidentiality.
At MODAA, we believe in transparent, well-structured agreements that protect all parties and set the foundation for a collaborative build. Without it, we understand that it creates a process that is displeasing to clients. Communication is one of our core tenants, and we expect to uphold it in every aspect of our work.
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