Construction disputes rarely come out of nowhere. In most cases they were written into the contract on the day it was signed: a vague scope, an open-ended programme, payments disconnected from progress, and no real remedy for delay or defects. These are the ten clauses to settle before signature, whether you are building a house or engaging a contractor.
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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.
Before any of the ten clauses matters, one thing has to be true: the contractor must be registered and hold a current annual licence of the class the works fall into. Section 25 of the Registration and Control of Contractors of Building and Technical Works Law, Law 29(I)/2001, puts that duty on the person awarding the work, and section 30(1) makes an agreement awarded in breach of it void. Ten well-drafted clauses in a void contract protect nobody. The check takes a phone call to the Council and belongs before signature, not after the first payment. Section 30(2) allows a cure only where the contractor is already registered and obtains the right class of annual licence within three months of the contract being made; where the contractor was never registered, there is no cure. Section 29 puts three narrow categories outside the rule, among them a single-storey building of not more than one hundred cubic metres that is not a dwelling, workplace or public building, and works needing no building permit under Cap. 96.
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 construction lawyers in Cyprus draft and review building contracts for owners and developers, advise during the works and represent clients in construction disputes when they cannot be avoided. If you are about to sign, let us look at the contract first.
Questions we are asked
Which clause causes the most disputes?
The scope. Most arguments about extras are in truth arguments about a scope that was never defined by complete drawings, technical specifications and a bill of quantities incorporated into the contract.
How should the payments be staged?
Against certified progress of the works, on certificates issued by the supervising architect or engineer, rather than by the passage of time. Advance payments should be secured.
Do I need a liquidated damages clause?
Yes, at a pre-agreed rate, so that loss does not have to be proved for every day of delay. The provision behind it is section 74(1) of the Contract Law, Cap. 149: where a contract names a sum to be paid in case of breach, reasonable compensation not exceeding that sum may be awarded, whether or not actual damage or loss is proved. The agreed figure is a ceiling rather than an automatic entitlement, which is a reason to set it at a defensible rate rather than an intimidating one. Together with a binding completion date and an extension of time clause, it is the machinery that makes the programme enforceable.
How should changes to the works be handled?
Through a written instruction and pricing procedure. No change should be made on a verbal understanding, because that is exactly where the dispute about what was agreed, and at what price, is born.
Related Reading
Construction Disputes in Cyprus
This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com or telephone +357 22 680 330.
If a dispute has already arisen, our construction disputes practice can assess your position quickly.
Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Published 23 July 2026
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