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What a Construction Contract Should Say

A one-page estimate is not a contract, and the gap between them is where every argument happens.

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· Michael Blair

Almost every serious dispute between a homeowner and a builder is a scope dispute. Both parties believed something different was included, and nothing written down settles it.

Scope in detail

Not "renovate bathroom" but the specific work, the specific materials by make and model, and explicitly what is excluded.

Exclusions matter as much as inclusions. A contract that lists what is not covered is a better contract, not a more cautious one.

Money and schedule

A payment schedule tied to milestones rather than dates, so payment follows progress. Retainage held until completion of the punch list is normal and worth including.

Start and substantial completion dates, and what happens if they slip.

  • Detailed scope, with explicit exclusions
  • Named materials, models and allowances
  • Payment tied to milestones, not calendar dates
  • How change orders are priced and approved
  • Who pulls permits and schedules inspections
  • Warranty period and what it covers

Change orders

Every project has them. What matters is that the mechanism is defined up front: written, priced and signed before the work happens.

Verbal changes agreed on site are the second most common source of dispute after scope.

Allowances

An allowance is a placeholder for something not yet selected — tile, fixtures, appliances. If it is set unrealistically low, the quote looks competitive and the final price is not.

Ask what the allowance actually buys and at which supplier, and reconcile it against real prices before signing.

FAQ

What a Construction Contract Should Say — questions

Is a written contract legally required in Tennessee?

Requirements vary with project value and licence type, and a written contract is standard practice for any substantial work regardless. The practical point is not legal compulsion but evidence — without a written scope, a disagreement about what was included has nothing to resolve it.

What is retainage?

A percentage of each payment held back until the work is complete and the punch list closed, commonly around five to ten percent. It gives the contractor a reason to return for the last items, which are the ones most likely to drift once the bulk of the money has been paid.

What is an allowance and why does it matter?

A placeholder amount for items not yet selected — tile, fixtures, appliances. Low allowances make a quote look competitive and produce overruns later when real selections cost more. Ask what each allowance buys and where, and check it against actual prices before signing.

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