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Contract Red Flags to Walk Away From

Most construction disputes are baked in at signing. These are the red flags that separate a fair agreement from one designed to leave you exposed.

AECORD Editorial3 min readConstruction 101

No Written Contract At All

The biggest red flag is the absence of a contract — a handshake and a WhatsApp message. Without a written agreement defining scope, rates, timeline, payment stages and quality, you have almost nothing to fall back on when things go wrong. Verbal understandings evaporate exactly when you need them.

Insist on a written contract for any job beyond trivial. It does not need to be a 40-page legal document; even a clear two-page agreement covering scope, price basis, payment schedule, timeline, materials/brands and defect liability transforms your position.

A Large Upfront Advance

Be very wary of any demand for a large advance before meaningful work — say, 30–50% upfront. A mobilisation advance to get started is normal, but it should be modest (often around 10%) and the rest tied to physical progress. An oversized advance transfers your leverage to the contractor and is the classic setup for a contractor who disappears or slows down.

The healthy pattern: small advance, then stage payments released against verified progress, then a retention held back until defects are fixed. If a quote front-loads the money, negotiate it back to a milestone structure.

Vague Scope and Specifications

"Finishing as per market standard" or "good quality materials" are traps. Vague scope lets a contractor substitute cheaper materials and argue the lower standard was always included. Every important material should be named by brand/grade — the cement grade, steel grade, tile brand, sanitaryware make, paint type.

If a quote is a single lump number with no breakdown, ask for a BOQ or at least an itemised specification. A contractor unwilling to specify what you are buying is a contractor planning to decide later, in their favour.

No Timeline, No Defect Liability

Two more omissions to catch. First, no completion timeline (and no consequence for missing it) removes any pressure to finish — projects then drift for months. A fair contract states a completion date and often a modest penalty / liquidated-damages clause for delay. Second, no defect liability period (DLP) means that once you pay, cracks, leaks and snags become your problem. A normal DLP holds the contractor responsible for defects for a set period (commonly around 12 months) after handover, backed by retained money.

If either is missing, add it before signing. These two clauses are your leverage for a finished, defect-free result — not just a building that is "mostly done".

Frequently asked

How much advance is reasonable to pay a contractor?
A modest mobilisation advance — commonly around 10% — to cover initial setup is normal. The rest should be released in stages against verified physical progress, with a small percentage (retention) held back until defects are fixed after handover. Treat demands for 30–50% upfront as a serious warning sign and negotiate them into a milestone-based schedule.
What must a construction contract include at a minimum?
At minimum: a clear scope and specification (materials named by brand/grade), the price basis (lump-sum or item-rate with a BOQ), a stage-wise payment schedule, a completion timeline, a defect liability period with retention, and how variations (changes) will be priced. Anything less leaves the important questions to be argued about later.

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