The Contract Agreement
The Contract Agreement is generally signed between the Client and the Contractor. Among other things, the Contract Agreement must state:
Who the parties are;
What the contractor is doing;
How much it is going to cost.
It is also strongly recommend that the Tender Form be placed inside of the Contract, to enable the client to determine the value of work done against every stage of the project. For example, if the Site Preparation is costing $50,000, you will know that you are required to pay the contractor $50,000 when the Site Preparation is finished. Avoid giving contractors money in advance at all times. Instead pay the contractor the funds in direct proportion to the stages of completion of work.
The Contract has to make provisions for minor changes. For example, the contractor may have to build an additional wall, approximately ten feet high, and charges say $30 per linear foot of wall. The client should know all these unit rates, so that whenever he/she asks the contractor to do something additional, he/she knows what the rates associated with the changes should be.
The Contract Agreement must only be signed when approval for the funding is given by the financial institution.