In costs plus percentage, the owner pays more than 100 percent of the documented costs, which usually requires a detailed billing of costs.  In this type of contract, the actual costs of labour are paid to the contractor, plus a certain percentage as a profit. Different contractual documents, subscriptions, specifications are not required at the time of signing the agreement. The contractor must keep all records relating to the costs of the equipment and work and the contractor is paid accordingly to the responsible engineer. This type of contract is suitable for emergency work such as difficulties in foundation conditions, construction of expensive structures, etc. The U.S. Federal Acquisition Regulations expressly prohibit the use of this type for U.S. federal government contracts.  A construction contract is a reciprocal or legally binding agreement between two parties on the basis of guidelines and conditions recorded as a document.
The two parties involved are one or more landowners and one or more contractors. The owner, often referred to as an “employer” or “customer”, has full authority to decide what type of contract should be used for a specified construction period and to set legally binding conditions in a contractual agreement.  A work contract is an important document because it describes the extent of the work, risks, obligations and legal rights of the contractor and the owner. It is illegal for a construction contract to include a “pay when paid” clause – that is, a provision that makes payment under the contract paid by a third party. In other words, a principal contractor cannot subordinate the payment to a subcontractor to the fact that the payment is made by the employer under the main contract. Section 108 of the Construction Act contains provisions that give each contracting party to the construction contract the right to refer to a dispute arising from the contract. The section states that a party may at any time communicate its intention to refer a dispute to the decision and that the timetable must be designed to ensure the appointment of the adjudicator and the referral of the case within 7 days of notification with the adjudicator`s decision within 28 days of the referral. This period of twenty-eight days may be extended by 14 days, with the agreement of the exiting party or for another period, by mutual agreement between the parties.
A subcontract is primarily a contract between a contractor or a prime contractor and a subcontractor. It describes the limitations of specialized work to be done for the construction project.  “Pay if Certified” clauses in construction contracts are also prohibited: payment is not conditional on the performance of obligations under another contract. A commercial contract is an agreement that contains all the work that should be performed for the construction of a commercial or non-residential building. A cleverly constructed commercial contract can protect the interests of both parties, minimize risk and increase the profitability of the contractor.