How to Read the Contractor’s Contract Before Signing? Key Clauses and Protection

19 Nov How to Read the Contractor’s Contract Before Signing? Key Clauses and Protection

How to Read the Contractor’s Contract Before Signing? The moment you sign the construction contract with the contractor is the most critical moment in your project, as it is the moment that determines the fate of your home, your money, and the entire project’s future. Many people fall into the trap of haste, signing vague contracts or being deceived by verbal offers that are not written into the agreement. At the first dispute, the contractor adheres strictly to the written contract, not the verbal promises.

Because we at ALoda Contracting Company receive daily consultations from clients who lost their money due to incomplete or inaccurate contracts, we decided to write this article that explains how to read the contractor’s contract before signing, and what the dangerous clauses are that you must pay close attention to, so you do not face any future problems.

Why is the Contractor Contract the Most Important Document in Your Project?

The contractor contract is the “law” that regulates the relationship between you and the executing company, defines your rights and obligations, and guarantees you receive what you paid for without shortage or delay.

The contract is not just a piece of paper; it is the real shield that protects you from:

• Fraud in materials.
• Raising prices after commencement.
• Delays in handover.
• Changing specifications without your permission.
• Non-adherence to warranties.
• Abandoning the project before completion.

Many people in Kuwait have suffered from every one of these issues, especially with unlicensed contractors operating without engineering supervision or legal commitment.

Firstly: How to Read the Contractor’s Contract Before Signing?

To understand the contract correctly, you must read its clauses one by one and understand every word written.

These four clauses are the most important and the most dangerous:

1. The Execution Duration Clause – Do Not Accept Vague Words

The first thing you must look for in the contract is the execution duration.

Some contracts use ambiguous phrases such as:

“Duration of work is subject to site conditions.”

Or:

“Completion period is approximate.”

These phrases are very dangerous because they give the contractor open room for delay without any penalty.

What Must Be Written in the Contract?

• Start date of work (Gregorian calendar date).
• Completion date of work (Gregorian calendar date).
• Number of grace days (if any).
• Penalties for delay (we will discuss this later).
• Work milestones and the timeline for each phase.

At ALoda Contracting Company, we use a clear and explicit clause:

“The Company commits to handing over the project within a period not exceeding ___ days from the date of work commencement, with the application of a delay penalty of ___ K.D. for each day of delay after the agreed-upon period.”

In this way, the client is assured that time is calculated by the minute, not by estimation.

2. The Payment Clause – Never Pay a Large Upfront Amount

Many contractors demand a large payment upfront, reaching 40% or even 50% before commencement.

This is a disaster!

A contractor who receives most of the money upfront will not be motivated to complete quickly, and some may abandon the project and flee (many stories in Kuwait confirm this).

The Correct Payment System:

Payments must be linked to milestone completion, for example:

• Payment upon commencement of excavation.
• Payment upon completion of foundations.
• Payment upon completion of the Structural Shell.
• Payment upon completion of finishes.
• Final payment upon final handover.

At ALoda Contracting Company, we use a fair and safe payment method based on the principle:

“No amount shall be paid without the full completion of the phase according to the agreed-upon specifications.”

And a final payment is withheld until final handover to ensure perfect execution.

3. The Amendments Clause – The Biggest Point of Conflict Between Client and Contractor

One of the biggest mistakes clients make is not scrutinizing the amendments clause.

Many contractors exploit this clause to demand additional amounts later under the pretext of “the client requested amendments.”

What Must Be Clarified:

• What constitutes a free amendment?
• What constitutes a paid amendment?
• Can the type of ceramic or marble be changed?
• Is it permissible to change room measurements after the ceiling is poured?
• Can a driver’s room or storage be added?

The Correct Method:

The contract must state:

“No amendment shall be considered payable unless the amendment is approved by both parties in writing before its execution, with the cost accurately defined.”

At ALoda Contracting Company, we have a client protection clause stating:

“No change shall be executed until the client signs an approved Change Order containing the price and time adjustment.”

In this way, everything is clear without unpleasant surprises.

4. The Penalties and Fines Clause – The Most Important Clause in the Contract

This clause is what protects you from a contractor who:

• Delays the work.
• Changes materials.
• Does not adhere to specifications.
• Abandons the project before completion.

The Most Important Types of Fines (Liquidated Damages):

• Delay Fine: A clear amount must be stated for each day of delay.
• Material Change Fine: If the contractor uses materials of lower quality than agreed upon.
• Site Damage Fine: Such as falling debris or breaking neighbours’ fences.
• Engineering Inspection Failure Fine: In case the Municipality or the certified engineer rejects any stage of the work.

At ALoda Contracting Company, we use the following formula:

“The Company commits to paying a penalty amount of ___ Kuwaiti Dinars for every day of delay after the completion period. Furthermore, any change in materials or specifications constitutes a violation incurring a fine valued at ___ Dinars, in addition to redoing the work at the Company’s expense.”

This single clause protects the client from 80% of contractor problems.

ALoda Contracting Company’s Contract Organization Template

To illustrate the picture, here is a real, condensed formula of how we organize our contracts:

Project Data

• Land address
• Lot number
• Plot number
• Land area
• Project type (Structural Shell – Finish – Turnkey)

Work Specifications

• Type of steel used
• Type of concrete
• Type of blocks
• Thermal and water insulation
• Air conditioning
• Ceramics
• Doors and windows

Timeline

• Start date
• End date
• Total duration

Payment System

• Five or six milestone payments linked to completion stages.
• Withheld payment upon final handover.

Penalties

• Delay fine
• Specification violation fine
• Fine for abandoning work without reason

Guarantees

• 25-year warranty on concrete works.
• 5-year warranty on insulation.
• Full 1-year warranty on plumbing and electrical works.

Client’s Right to Visit

The client has the right to visit the project at any time with the site supervisor and receive a monthly report on the completion percentage.

Attached Documents

• Structural blueprints
• Electrical blueprints
• Technical specifications schedule

This model is what distinguishes ALoda Contracting Company, as it provides the client with a clear, tight contract that allows no loopholes for the contractor to exploit.

Golden Tips Before Signing the Contractor Contract

• Request a copy of the contract and read it completely before signing.
• Do not agree to anything verbally.
• Ensure every detail is written down.
• Request a schedule of key components and specifications.
• Do not pay a large upfront amount.
• Ensure the company is officially licensed.
• Ask about previous projects with photos and videos.

These steps alone are enough to save you from a loss that could reach tens of thousands.

Conclusion

Understanding how to read the contractor’s contract before signing is the real weapon that protects you from mistakes and surprises.

When you deal with ALoda Contracting Company, you deal with a licensed entity, with clear official contracts, long-term warranties, and full engineering supervision, which turns your project from a “risk” into a one hundred percent safe investment.