Construction Contract template

Construction Contract

With the help and guidance of God, on this day __________, corresponding to / / AH, in the city of __________, it was agreed between: First Party: Mr __________, Nationality: ________, Civil Registry/Iqama No. (__________) dated / / AH, National Address: __________, City: __________, District: __________, Street: __________, Mobile (__________), Email (__________). Second Party: __________ Establishment for Building Contracting, Maintenance and Operation, Commercial Registration No. (__________) dated / / AH issued in __________, owned by Mr __________, Nationality: ________, Civil Registry/Iqama No. (__________) dated / / AH, National Address: __________, City: __________, Mobile (__________). Represented for signature by Mr __________, who is authorised to follow up all executive and technical matters and to receive payments. Preamble: Whereas the First Party wishes to construct __________ on his land located in the city of __________, __________ District, under title deed No. (__________) dated / / AH; and whereas the Second Party is a licensed establishment with sufficient experience to carry out the required works; the two parties, having full legal capacity under Sharia and the law, have agreed as follows:

Clause One: Preamble and Annexes

The preamble, annexes, maps and sketches form an integral part of this contract.

Clause Two: Subject of the Contract

The Second Party undertakes to carry out all works necessary to construct __________ in accordance with the drawings, plans and documents issued by __________ Engineering Consultancy, Building Permit No. (__________) dated / / AH, and all technical specifications set out in Contract Annex No. (1).

Clause Three: Contract Term

The two parties have agreed that the project execution period is (__________) months commencing on / / AH, being the date on which the site is handed over to the Second Party free of obstructions.

Clause Four: Contract Value

The two parties have agreed that the total contract value is (__________) Saudi riyals, payable in accordance with the payment schedules attached in Contract Annex No. (2).

• Value added tax: The above value is (inclusive / exclusive) of value added tax — the option is to be specified on signing. Construction works are a taxable supply, so where the Second Party is registered with the Zakat, Tax and Customs Authority (ZATCA), it shall issue a compliant tax invoice for each payment.

Clause Five: Method of Payment

The First Party undertakes to pay the Second Party's dues in accordance with the instalments specified in Contract Annex No. (2), and payments shall be made according to the completion percentages determined by the technical consultant.

• Payments shall be made by bank transfer to IBAN: SA..............................
• A retention of (____%) shall be withheld from each payment, to be released after expiry of the warranty period stipulated in Clause Eight.

Clause Six: Adherence to Schedules

The Second Party undertakes to submit an approved time schedule for executing the project, and this schedule must be adhered to in order to ensure progress of the work. The First Party may take the necessary measures if the Second Party falls behind the schedule.

• Delay penalty: If the Second Party exceeds the execution period without an acceptable excuse, the First Party shall be entitled to a penalty of (__________) Saudi riyals for each day of delay, not exceeding (____%) of the contract value.
• No penalty shall be charged for delay attributable to the First Party or to variations ordered by him, and the period shall be extended accordingly.

Clause Seven: Technical Consultant

The First Party shall appoint a technical consultant to follow up progress of the work and supervise execution. The consultant shall be authorised to take the decisions necessary to ensure quality of execution and conformity with the specifications.

Clause Eight: Responsibility for the Work and Warranty

The Second Party undertakes to bear full responsibility for the quality of the work and its compliance with the agreed standards and specifications. In the event of any defects or shortcomings in execution, the Second Party shall bear the cost of repair.

• Warranty period: The Second Party warrants the executed works for (__________) months from the date of final handover, during which it undertakes to repair, at its own expense, any defects arising from poor workmanship or poor-quality materials supplied by it.
• This is without prejudice to the warranty provisions of the Civil Transactions Law concerning matters affecting the safety and soundness of buildings.

Clause Nine: Final Handover

On completion of the works, a final inspection shall be carried out by the First Party or his technical representative. If the works are confirmed to conform to the specifications, a final acceptance certificate shall be issued.

Clause Ten: Termination and Rescission

The First Party may terminate the contract if the Second Party breaches its contractual obligations or delays execution of the works without justification. The Second Party shall bear all costs arising from the rescission.

• Rescission shall only take place after written notice and the granting of a cure period of (________) days, and dues shall be settled on the basis of the actual completion percentage at the time of rescission.

Clause Eleven: General Provisions

1. This contract is governed by the laws of the Kingdom of Saudi Arabia, in particular the Civil Transactions Law as regards the contracting (muqawala) contract.
2. Any disputes that may arise between the two parties shall be settled amicably; failing that, recourse shall be had to the competent judicial authority.
3. All written correspondence forms part of this contract, and the National Address and email recorded above are adopted as the chosen domicile for serving notices.

Signatures: First Party: Name: __________ Signature: __________ Date: / / AH Second Party: Name: __________ Signature: __________ Date: / / AH