Fixed Price Construction Contract Template: A Clause-by-Clause Guide for Canadian Owners and Contractors

What Is a Fixed Price Construction Contract?

A fixed price construction contract is a written agreement under which a contractor commits to completing a defined scope of work for a single total price. The owner pays that price and no more, regardless of whether the contractor’s actual labour and material costs come in higher or lower than anticipated, unless the parties execute a change order that adjusts the price.

Fixed price contracts transfer cost risk to the contractor. If materials cost more than the contractor anticipated, or if the job takes longer than planned, those cost overruns are the contractor’s problem. The owner receives budget certainty from the moment of signing. That certainty is only as reliable as the scope of work the contract describes.

The alternative structure is a cost-plus contract, where the owner pays the contractor’s actual costs plus a fee or percentage. Cost-plus contracts are appropriate when the scope of work cannot be fully defined before construction begins. They transfer cost risk to the owner. Fixed price contracts are appropriate when the scope can be defined in writing with sufficient specificity that the contractor can price it accurately.

The CCDC 2 Stipulated Price Contract, published by the Canadian Construction Documents Committee, is the most widely used fixed price construction agreement in Canada for commercial and institutional projects. The ATAC LAW template on this page is a simplified version designed for residential renovations, home construction, and light commercial projects where the 56-page CCDC 2 is more complex than the project requires. The core principle is identical: the contractor commits to a price, the owner commits to a scope, and neither party changes the deal unilaterally after signing.

This contract is probably appropriate for contract values up to a few hundred thousand dollars. For larger projects, a more detailed contract such as one of the CCDC-type contracts should be used. Even with a “template” contract such as this one, or a CCDC-type contract, legal advice is still strongly recommended, since much of the risk in these types of contracts comes from the user-inputted scope of work.

How to Fill In the Construction Agreement Template

Complete every blank in the template before either party signs. A blank left empty at signing does not mean the parties agreed to leave the term open: it creates an ambiguity about a term that was negotiated, which a court or arbitrator must resolve later by weighing evidence and conflicting testimony rather than by reading the words of the agreement.

The opening section captures four items: the agreement date, the contractor’s full legal name and address, the owner’s full legal name and address, and the property address where the work will be performed.

Use the contractor’s legal business name exactly as it appears on their business licence or BC corporate registry filing. A contractor operating as a corporation is a distinct legal entity from the individual who runs it. Naming the wrong entity in the contract means the contract binds a party that may have no assets. If you are uncertain whether your contractor operates as an individual, a partnership, or a corporation, ask for their business name registration or corporate registry number before signing. For a broader look at the fixed price structures used on BC projects, see ATAC LAW’s guide to guide to lump sum contracts in BC.

Use the owner’s full legal name. If ownership is shared (two spouses, a corporation, a strata), all owners must sign. A contract signed by one co-owner may not bind the other.

The property address in Clause 1 identifies the project site. Use the full civic address, including the municipality and province. For strata properties, add the strata lot number and strata plan number in Schedule A.

Both parties sign on the signature page. Each party keeps a signed original copy. A signed copy in the owner’s possession and a signed copy in the contractor’s possession eliminates later disputes about what version the parties agreed to.

Schedule A: The Scope of Work Is the Foundation of the Entire Contract

Schedule A defines exactly what the contractor is hired to do. Every other provision in the contract, including the price, the payment milestones, the warranty, and the change order requirement, operates only in relation to the work described in Schedule A. A vague or incomplete Schedule A undermines every protection the contract provides.

A poorly written scope of work is the single most common cause of construction disputes in BC. The pattern is consistent: the contractor prices the work based on what the contract says. The owner expects the work based on what the contractor verbally described during negotiations. Those two things are rarely identical. The contractor believes the price covers only what Schedule A describes. The owner believes the price covers everything a reasonable renovation requires. Both positions are defensible. Both produce expensive arguments.

Schedule A must include, at minimum, the following:

• A description of every trade and category of work. List framing, electrical rough-in, plumbing rough-in, HVAC, insulation, drywall, tile, cabinetry, painting, and any other trade separately. Do not write “complete renovation” and expect both parties to agree on what that means.
• Material and finish specifications. Name tile sizes, paint grades, fixture models, or cabinet manufacturers. Where selections have not been made, set an allowance amount and specify what happens when the actual selection exceeds the allowance (a change order is required).
• Explicit exclusions. List every category of work the contractor is NOT performing. If the owner supplies their own appliances, fixtures, or flooring, name each item. If landscaping, driveway repair, or painting is excluded from this contract, say so in writing.
• Owner-supplied materials and items. If the owner is supplying any material that the contractor will install, identify it clearly. The contractor is not responsible for defects in owner-supplied materials under Clause 12 of this agreement.
• Standards of finish. “Renovation standard,” “new construction standard,” and “premium finish” are not interchangeable. Describe the expected finish standard with reference to a sample, a specification, or a defined industry standard, where applicable.
• Allowances. Where material selections are not finalized, insert a dollar allowance and state that selections exceeding the allowance require a written change order before the upgrade is ordered.
• Project timeline. Insert a start date and a target substantial completion date, or a defined number of working days for completion. A timeline is not a guarantee, but a contract with no timeline gives neither party a basis to claim delay.

A complete, specific, mutually agreed Schedule A prevents the majority of construction disputes before they start. If you find it difficult to write down exactly what work is included in the project and what is not, that difficulty is a signal: the scope is not yet clear enough to sign a fixed price contract. Resolve the scope in writing before you resolve the price.

Clause 2: The Fixed Contract Price — What It Includes and What It Does Not

The fixed contract price is the total amount the owner pays for all work described in Schedule A, plus GST and applicable taxes. The contract price changes only through a written change order signed by both parties. No verbal instruction, email approval, or text message modifies the contract price, in theory.

Enter the contract price in Canadian dollars in the Clause 2 blank. Enter a specific number, not a range. A price stated as “$80,000 to $90,000” is not a fixed price: it is an estimate. Entering a range defeats the purpose of a lump sum agreement and creates a dispute about where in the range the final invoice lands.

The contract price excludes a defined set of items by default, unless Schedule A states otherwise. Items excluded from the contract price include: permit fees and inspection charges, utility connection or disconnection fees, engineering or design fees, testing costs (soil, structural, environmental), hazardous-material work (asbestos abatement, mould remediation), concealed conditions discovered after work begins, and any work outside the scope described in Schedule A. These items are all typically owner-borne costs, but they could be included in Schedule A should the parties so desire.

Taxes are additional to the stated contract price. In BC, residential construction services generally attract GST. The contractor collects and remits GST. The owner pays it. Neither party should treat the stated contract price as tax-inclusive unless the contract explicitly uses the words “inclusive of all applicable taxes.”

Clause 3: Payment Schedule — Deposit, Progress Payments, and Statutory Holdback

The payment schedule in this template structures payments in three stages: a 10% deposit on signing, defined progress payments tied to project milestones, and a final balance upon substantial completion. The BC Builders Lien Act requires owners to retain a 10% statutory holdback from every payment on an improvement contract. Releasing payment without retaining the holdback exposes the owner to double payment if unpaid subcontractors file liens against the property.

The 10% deposit is payable when both parties sign the agreement. The deposit is an advance on the contract price, not a non-refundable booking fee. If the contractor abandons the project before completing the work, the unearned portion of the deposit is recoverable. For a full explanation of the owner’s holdback obligations under BC law, see ATAC LAW’s overview of builders lien holdback requirements in BC.

Progress payments (Clause 3b) are optional but strongly recommended on projects exceeding 30 days in duration. Fill in the milestone or percentage of completion that triggers each progress payment. Milestone-based triggers are clearer than percentage-based estimates. Common milestones for residential renovation projects include: demolition complete, framing complete, mechanical and electrical rough-in complete, drywall complete, finishes complete. Each milestone is a visible, verifiable state of the project. Neither party needs to estimate a percentage.

The final balance is payable on substantial completion, minus any agreed deficiency holdback and minus the statutory holdback required by law. Substantial completion is reached when the work is sufficiently complete that the owner can use the property for its intended purpose, even if minor deficiencies remain outstanding.

The statutory holdback under BC’s Builders Lien Act (RSBC 1996, c. 41) requires owners to retain 10% of every payment amount on improvement contracts. That holdback protects unpaid subcontractors and material suppliers: if the general contractor fails to pay them, those trades can file a builders lien against the property title and claim against the holdback funds. An owner who pays the contractor in full without retaining the holdback may be ordered to pay that amount a second time, directly to the unpaid subtrade. The holdback period runs 55 days from the date of substantial completion in BC, after which the holdback can be released safely.

Overdue invoices under this agreement bear interest at 2% per month, compounded monthly. A $40,000 unpaid invoice accumulates over $9,700 in interest charges within one year at that rate. Both parties benefit from invoicing and paying on schedule.

Clause 5: Site Conditions and Concealed Conditions

Concealed conditions discovered after work begins, including structural deficiencies, undocumented utilities, rot, mould, asbestos, or code non-compliance, are excluded from the fixed contract price. The contractor prices the work based on a reasonable pre-contract inspection and on information the owner provides before signing. What cannot be observed before signing is not included in the price.

When a contractor opens a wall during a bathroom renovation and finds unexpected rot, the rot is a concealed condition. The contractor stops work, notifies the owner in writing, photographs the condition, and provides a written change order covering the additional scope and cost. Work on the concealed condition does not begin until the owner signs the change order. That sequence protects both parties: the owner knows the extra cost before it is incurred, and the contractor has written authorization to proceed.

Owners reduce the risk of concealed condition disputes by disclosing everything they know about the property’s condition in Schedule A before signing. Prior water damage, previous pest infestations, known asbestos in an older home, strata restrictions on work hours, or a history of drainage problems should all appear in Schedule A. Known conditions disclosed before signing are either priced into the contract or excluded by agreement. Known conditions concealed from the contractor shift the liability risk back to the owner.

Change Orders: The Only Way to Modify the Contract After Signing

Every change to the scope of work, the contract price, or the project schedule requires a written change order signed by both parties before the changed work begins. A verbal instruction, a text message, and an email are intended not to modify this contract. Without a signed written change order, a contractor who performs extra work is intended to bear the risk that the owner disputes the charge at invoice time.

Change orders are among the most frequently litigated provision in residential construction contracts in BC. The typical dispute follows a predictable pattern: the owner gives a verbal instruction during site visits, the contractor performs the extra work without documenting it, and the final invoice includes charges the owner denies authorizing. By that point, neither party has contemporaneous written proof of what was said, when it was said, or what price, if any, was agreed.

The template is explicit on this point: no change to the work, the contract price, or the schedule is binding unless it is recorded in a written change order signed by both parties before the change is performed. The phrase “before the change is performed” is deliberate. A change order signed after the extra work is finished documents the work but eliminates the owner’s ability to decline it before the cost is incurred.

Practical discipline on change orders protects both parties. When the owner asks for a different tile than the one specified in Schedule A, the contractor stops, prepares a written change order with the cost impact and any schedule impact, and obtains the owner’s signature before ordering the new tile. The same discipline applies to a $150 fixture upgrade and a $15,000 structural revision. The amount does not change the legal requirement. When change order disputes escalate into formal claims, ATAC LAW’s guide to resolving construction contract disputes in BC outlines the available remedies for both owners and contractors.

While we have said multiple times that the intent of this contract is to require changes to be made in writing, users of this contract (and anyone involved in a construction project) should be aware that courts regularly waive the requirement for strict compliance with contractual change order provisions. In other words, if an Owner gives oral instructions for changes to the work, and no change order is made in writing, but the contractor does in fact perform extra work, the contractor will often be able to recover his costs and a limited amount of profit for the extra work. It is precisely this way of managing a project that leads to construction disputes and litigation, so it is obviously recommended to use the written change order process always.

Clauses 9 and 10: Subcontractors, Safety, and Insurance

The contractor retains full legal responsibility for all subcontractors and suppliers engaged on the project. The contractor controls site safety and must maintain liability insurance and WorkSafeBC coverage appropriate for the work. The owner maintains property insurance for the building and its contents throughout construction.

Under Clause 9, the owner does not direct, manage, or separately contract with the contractor’s subtrades without the contractor’s written consent. If the owner wants to supply their own electrician, plumber, or tile installer, that arrangement must be agreed in writing before signing and excluded from the contractor’s scope in Schedule A. Mid-project parallel contracting by the owner creates liability ambiguity, safety coordination problems, and disputes about who is responsible for deficiencies at the interface between two contractors’ work.

Clause 10 assigns safety responsibility to the contractor. The contractor controls the means, methods, and safety procedures of the work. WorkSafeBC’s Occupational Health and Safety Regulation imposes specific obligations on prime contractors on multi-employer worksites, including the duty to coordinate the activities of all employers to ensure compliance with the regulation. The template reflects that legal framework: the owner does not direct safety and the contractor maintains WCB registration and coverage for all workers and subcontractors.

On insurance: the contractor carries liability insurance and workers compensation coverage appropriate for the type and value of work. The owner maintains property insurance on the building and its contents. Builders risk insurance, which covers the structure under construction against damage during the project, is not automatically assigned in this template. The party responsible for obtaining builders risk coverage must be identified explicitly in Schedule A. On higher-value projects, both parties should confirm their respective insurance coverage with their brokers before work begins.

Clause 12: Deficiencies and the One-Year Workmanship Warranty

For one year after substantial completion, the contractor corrects deficiencies caused by poor workmanship or failure to perform the work in accordance with Schedule A, the applicable plans, and building code requirements. The warranty covers the contractor’s labour. Manufacturer warranties on materials and equipment are passed through to the owner to the extent they are available and transferable.

A deficiency under this contract is a failure of the completed work to meet the standard required by Schedule A and applicable building code. Deficiencies are not changes the owner decides to make after the project is finished. A homeowner who decides after completion that they prefer a different tile colour has no warranty claim. A homeowner whose tile grout begins cracking within the first year due to improper installation has a valid deficiency claim. Owners facing contractor resistance to warranty corrections will find practical guidance in ATAC LAW’s article on suing a contractor for poor workmanship in Canada.

To trigger the warranty, the owner must notify the contractor in writing within a reasonable time after discovering the deficiency and must give the contractor a reasonable opportunity to inspect and correct it. An owner who calls a second contractor to repair a deficiency before giving the original contractor an opportunity to inspect may forfeit the warranty claim on the affected work. Document all deficiency notices in writing. Photograph deficiencies at the time of discovery and at each subsequent inspection.

The warranty expressly excludes: normal wear and tear, owner-supplied materials, changes made by others after completion, misuse or lack of maintenance, movement or failure of existing structures, concealed conditions, mould or hazardous substances not caused by the contractor, weathering, corrosion, acts of God, and damage caused by anyone other than the contractor or its subcontractors. These exclusions are enforceable. An owner who claims warranty coverage for a excluded item will not succeed under this agreement.

Deficiency disputes that survive the warranty process frequently become construction litigation. ATAC LAW represents owners and contractors in builders lien and construction deficiency claims before BC Supreme Court and in arbitration. ATAC LAW handles both sides: owners seeking to recover remediation costs from a contractor and contractors defending against inflated or unsubstantiated deficiency claims.

Dispute Resolution: What Happens When the Contract Breaks Down

This construction agreement is governed by the laws of British Columbia. Disputes that the parties cannot resolve through direct negotiation proceed to mediation, and if mediation does not resolve the matter, to BC Supreme Court or to arbitration by agreement of the parties. The BC Small Claims Court has jurisdiction over construction disputes up to $35,000. Disputes above that amount proceed to BC Supreme Court.

The most common disputes under fixed price construction agreements in BC fall into four categories. First: the owner refuses to pay the final balance, citing alleged deficiencies that the contractor disputes. Second: the contractor invoices for extras that the owner denies authorizing, because the extras were not documented in signed change orders. Third: subcontractors or material suppliers file builders liens against the property because the general contractor failed to pay them. Fourth: one party terminates the contract on the ground that the other has fundamentally breached its obligations, and the parties dispute whether the termination was justified. ATAC LAW’s overview of construction disputes in BC covers how each category develops and what legal remedies are available to owners and contractors.

This template does not include a mandatory arbitration clause. Neither party is obligated to arbitrate under this agreement. A dispute proceeds to BC Supreme Court unless both parties agree in writing, after the dispute arises, to submit it to arbitration instead. Many commercial construction contracts, including the CCDC 2, include mandatory arbitration clauses. If you want binding arbitration as the dispute resolution mechanism for your project, that provision must be added to this template before signing and must comply with BC’s Arbitration Act (SBC 2020, c. 2).

Early legal advice consistently produces better outcomes in construction disputes. A construction lawyer’s review of your position at the notice-of-default stage costs a fraction of what a BC Supreme Court trial costs.