Contractor Contract Checklist: What Must Be in Every Contract

A contractor contract is your primary legal protection for everything that happens from the day work begins to the day the punch list is resolved, and a bad contract — or no written contract at all — leaves you with almost no legal recourse when things go wrong. Most states legally require home improvement contracts above a minimum dollar amount to be in writing and to contain specific elements. This checklist covers what every contractor contract must include to protect you.

What Legal Elements Must a Contractor Contract Include?

Most states that regulate home improvement contracting require written contracts for projects above a minimum value (often $500 to $1,000). The required elements vary by state, but most state laws require at minimum: the contractor's full legal name, business address, license number, and insurance information; a description of the work; the total contract price; a payment schedule; start and estimated completion dates; and a notice of cancellation rights where applicable.

California, Florida, New Jersey, Maryland, and most other regulated states have additional required contract elements specific to home improvement work. Contractors who fail to include required elements can face penalties and, in some states, the contract may be voidable or unenforceable against you.

What Should the Scope of Work Section Contain?

The scope of work is the most important section of any contractor contract. It defines exactly what you are paying for. A vague scope creates ambiguity that benefits the contractor; a specific scope protects you.

The scope of work should include:

• All work to be performed, described specifically (not “install flooring” but “install Shaw Floorte Pro 5 Series vinyl plank, color Toasted Wheat, throughout main level, approximately 850 square feet”)
• All materials to be used, specified by brand, model, grade, color, and quantity where applicable
• Work to be performed by subcontractors, including the names and license numbers of subcontractors where known
• Work explicitly excluded from the contract, so there is no ambiguity about what will require a change order
• Site preparation and cleanup responsibilities
• Permit responsibility explicitly assigned to the contractor

What Should the Payment Section Contain?

The payment section should specify the total contract price, the payment schedule tied to milestones, what triggers each payment, acceptable payment methods, and consequences for late payment by either party. It should also specify what happens to pricing if materials costs change significantly (an escalation clause).

The payment section should include a change order provision: all changes to the scope of work must be documented in a signed written change order before the additional work is performed. This prevents the common contractor tactic of performing additional work verbally approved and then billing for it at completion.

What Should the Warranty Section Contain?

The warranty section should specify the duration of the workmanship warranty (the contractor's warranty for the quality of their labor and installation), the process for making warranty claims, and the contractor's obligation to respond within a specific timeframe. A standard workmanship warranty is one year, though better contractors offer two to five years.

The warranty section should be distinct from equipment and material warranties, which are provided by manufacturers and typically covered in separate documentation. The contractor's warranty covers how the materials were installed; the manufacturer's warranty covers the materials themselves.

What Other Sections Should a Contract Include?

Additional important contract sections:

• Dispute resolution: The process for resolving disputes (mediation, arbitration, or litigation) and the jurisdiction and venue for any legal proceedings.
• Lien waiver provision:Require the contractor to provide a partial lien waiver with each progress payment and a full lien waiver at final payment. This protects you from mechanic's liens filed by subcontractors or suppliers if the contractor fails to pay them.
• Cleanup and site maintenance: Who is responsible for daily site cleanup and how materials will be stored and protected.
• Completion definition: What constitutes project completion (often defined as receipt of certificate of occupancy and resolution of all punch list items).
• Termination rights: Circumstances under which either party can terminate the contract and what compensation is owed in each scenario.

Before signing any contractor contract, verify the contractor's license at CheckLicensed.com. For $0.99, you confirm the contractor is legitimately licensed and in good standing — because even the most carefully drafted contract provides limited protection if the contractor behind it is not who they claim to be.