• A construction contract is a legal agreement between two parties detailing a construction project one party hired the other party to complete. Construction contracts are used for simple work such as a minor remodel job or construction of a deck. They are also used for complex projects such as the construction of a house, building or commercial project. The five main parts of a residential construction contract are basic information, project scope, schedule of work, payment details, and contract clauses and information.
  
  

Basic Information

• A construction contract should always state the basic information of both parties involved. This involves both parties' names, addresses and phone numbers. The information regarding the location of the construction site is listed including the property address and property description. As with most legal contracts, this form is signed and dated by both parties after both agree to it.
  
  

Project Scope

• The project scope is an important part of a construction contract because this is where the exact work performed is listed. The contractor details the work to be done and includes detailed schematics and specific instructions. This section also states any exclusions or extras. Typically, the contract includes a drawing of the project or the blueprints so the customer can see exactly what work will be done. A contract should not be signed if one of the parties doesn't agree with what is stated in the scope. The scope of the project generally lists allowances and change order information.
  
  

Schedule of Work

• The schedule of work contains important dates including the start and completion dates. Major milestone dates are also contained in this contract. In the building of a new house, the drywall stage is often listed as a milestone date. This schedule should correlate with all the requirements proposed in the project scope and should also include inspection dates.
  
  

Payment Details

• This part of a construction contract lists the total cost of the project and the dates in which payments are to be made. Most construction contracts set up a payment plan based on a percentage of job completion. It also includes the terms of financing, construction draw schedule and insurance requirements.
  
  

Clauses

• Many clauses may be included in a construction contract. This includes topics such as substitution policies, methods for resolving disputes, arbitration clauses and warranty information. Other information in this section can be hold harmless clauses, information regarding permits and building codes, and any penalties or fines that may apply.