Before You Sign a Building Contract in Cyprus: Ten Clauses That Protect You
Introduction
Construction disputes in Cyprus rarely come out of nowhere. In most cases the seeds are sown on the day the building contract is signed: a vague scope, an open-ended programme, payment terms disconnected from progress, and no meaningful remedy for delay or defects. Whether you are an owner building a house or a developer engaging a contractor, the following ten clauses deserve careful attention before signature.
The Ten Clauses
Scope and specifications: the works must be defined by reference to complete drawings, technical specifications and a bill of quantities, all signed and incorporated into the contract. Most disputes about extras are really disputes about an undefined scope.
Price and payment: payments should follow certified progress of the works, against certificates issued by the supervising architect or engineer, and not the mere passage of time. Advance payments should be secured.
Programme and completion date: a binding completion date, a realistic programme and a mechanism for documenting extensions of time are essential; without them, delay claims collapse into arguments.
Liquidated damages for delay: a pre-agreed daily or weekly amount for late completion gives the employer a workable remedy and concentrates the contractor’s mind. The amount must be a genuine pre-estimate of loss.
Variations in writing: every change to the works should require a written instruction with agreed pricing before execution. Verbal variations are the single most common source of final account disputes.
Retention: a percentage of each payment, commonly five to ten percent, should be retained until the end of the defects liability period, giving the employer security for the remedy of defects without litigation.
Defects liability period: the contract should define the period after completion during which the contractor must return and remedy defects at its own cost, and what happens if it fails to do so.
Insurance and safety: contractors all risks insurance, employer’s liability cover and clear allocation of responsibility for site safety and third-party damage must be in place before works start, with policies actually produced, not merely promised.
Termination and suspension: both parties need clearly defined rights to suspend or terminate for serious breach or insolvency, together with a mechanism for valuing the works completed up to termination.
Dispute resolution: an arbitration clause, or a well-drafted jurisdiction clause, together with a requirement for the parties to continue performing during disputes, prevents a disagreement over one variation from paralysing the whole project.
A Note on Permits and Supervision
The contract should also state clearly who is responsible for obtaining the building permit and planning permission, and who supervises the works. Building without the required permits exposes the owner to notes of unauthorised works on the title, with serious consequences for future transfers, a subject we address in a separate article.
Conclusion
A building contract is cheap insurance: the cost of negotiating and drafting it properly is a small fraction of the cost of a single construction dispute. Our firm drafts and reviews building contracts for owners and developers, advises during the works and represents clients in construction disputes when they cannot be avoided. If you are about to sign, let us look at the contract first.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Klitos Platis by email at klitos@kleanthousplatis.com. You can also message us on WhatsApp.