This contractor agreement template, in PDF and Word, has 18 sections where the employer and the contractor set out the scope of work, the contract value, the progress claim schedule, variation orders and delay compensation. Every clause the Civil Transactions Law governs carries its article number, and an 11-item checklist sits before the signature boxes.
Word to edit and add your business logo, PDF to print, fill in by hand, sign and stamp. Both files are in Arabic.
Read this before you fill in the template
- The contractor agreement template is a draft to start from, not legal advice. It puts the contracting terms in one place for the two parties to agree on, so have a lawyer review it before you sign.
- Some clauses are set by law, others by agreement. A construction contract (muqawala) is governed by Articles 461 to 478 of the Civil Transactions Law, and the template shows the article number next to each clause that relies on one. Retention, the performance guarantee and the defects warranty period are terms the two parties agree on, so we left them blank.
- Check before you sign. Check the contractor’s registration on the Muqawil platform, and the building permit and latent defects insurance requirements on the Balady platform.
What the contractor agreement template contains
| Template section | What it covers |
|---|---|
| Contract details | Contract number, place and date of signing |
| Employer | Name, type and number of the ID or commercial registration, authorised signatory, VAT registration number if there is one, and national address |
| Contractor | Business name, commercial registration, authorised signatory, and VAT registration number if the business is registered |
| Project details | Project name and location, title deed or plot number, building permit number, and the supervising engineering office |
| Scope of work and specifications | Type and description of the works, and a table of the attached drawings and specifications |
| Materials and tools | A table setting out who supplies the structural materials, finishing materials, equipment, electricity and water |
| Duration | Start date and site handover, duration in days, completion date, and grounds for extension |
| Contract value | Lump sum or unit rate, the value in figures and in words, the VAT line, and an 8-item bill of quantities |
| Payments and progress claims | The advance payment and how it is recovered, and a 10-row progress claim schedule with the inspection and acceptance date, VAT, retention and net payment |
| Retention and performance guarantee | Two optional clauses: the retention percentage and when it is released, and the type, value and duration of the guarantee |
| Variation orders | A table for each variation order, its effect on the value and the duration, and the date the employer approved it |
| Delay and compensation | The compensation for each day or week of delay, and its cap |
| Subcontracting | Whether it is allowed, and which works may be subcontracted |
| Insurance and safety | Four types of insurance and who bears each one, plus safety obligations on site |
| Handover and defects warranty | Provisional and final handover dates, and the period and scope of the defects warranty |
| Termination and disputes | Grounds for termination, the notice period, and the agreed way to resolve a dispute |
| Checklist before signing | 11 items to review before you sign |
| Signatures | Signatures of the employer and the contractor, with a stamp box for each |
What the Civil Transactions Law sets and what the parties agree
Each clause in the table below has a part the law sets and a part the two parties write into the template:
| Clause | What the law sets | What the parties write |
|---|---|---|
| Stage payments | The contractor is owed the value of a stage after its work is inspected and accepted (Article 469) | The number of stages, the value of each, and the advance payment |
| Design changes | A lump-sum price rises only through the employer’s fault, or with the employer’s permission and agreement to the increase (Article 471) | A written, priced variation order signed by the employer |
| Quantity overruns | In a unit-rate contract, the contractor notifies the employer immediately of a significant overrun (Article 470) | The estimated bill of quantities and the rate for each unit |
| Delay compensation | It may be agreed in advance, it is not due where it is shown that no harm occurred, and the court may reduce it (Articles 178 and 179) | The amount for each day or week, and its cap |
| Subcontracting | Allowed unless the law, the agreement or the nature of the work rules it out, and the contractor stays liable to the employer (Article 473) | Allowed, allowed with written consent, or not allowed |
| Materials and tools | Materials may come from either party, and the contractor bears the cost of tools unless agreed otherwise (Articles 462 to 464) | Who supplies each item in the materials table |
| Handover | The employer must take delivery of the completed work (Article 468) | The provisional and final handover dates |
| Defects warranty | Articles 461 to 478 set no warranty period for the works | The warranty period and its scope |
That is why four fields in the template are blank, with no figure suggested: the delay compensation amount, the retention percentage, the defects warranty period and the performance guarantee value. We found no legal text that sets these figures, so they are for the two parties to agree, and the template does not suggest a number nobody chose.
Shell or finishing works: one construction contract sample, two scopes
One contract works for shell (structure only), finishing and turnkey works, and the difference shows in two sections. Under Scope of work you write the type and description of the works and attach the drawings. Under Materials and tools you set who supplies the structural materials and who supplies the finishing materials, because Article 462 leaves that to the parties. If the employer supplies the materials, the contractor looks after them and returns whatever is not used, under Article 463.
VAT and the electronic invoice on progress claims
According to the ZATCA Guideline for the Real Estate Sector under VAT (Issue 3.0, May 2026), all contracting and construction services in the Kingdom are subject to VAT at 15%, including the materials built into the works or installed on site. A subcontractor’s works for the main contractor are taxed at the same rate. That is why the contract value section carries this line: 15% VAT is added if the contractor is VAT-registered.
If the contractor is resident and registered for VAT, an electronic invoice is issued for each payment, according to ZATCA’s E-Invoicing Detailed Guideline. The progress claim the employer accepts is the basis of the progress invoice issued after it, and the advance payment is recovered from the progress claims in the way the two parties write into the contract. For more, read our guide to advance payments and cash flow and the glossary term advance payments.
From contract clauses to the invoice and the project cost
What you sign in this contract turns into figures in the contractor’s books: each accepted progress claim becomes an invoice, each variation order changes the contract value, and each retention amount is a balance owed but not yet paid out. To estimate the cost before you price the job, use the contracting project cost template. For the quotation that comes before the contract, use the price quote template, and to track the instalments, due dates and balances, the payment schedule template. If the contract asks for a performance guarantee, see the glossary term bank guarantee.
In Qoyod accounting software, from the Pro plan, you create a project for each contract and link to it the sales invoice issued for each progress claim, so the invoice’s journal entry follows it to the project. You then filter the income statement by project to see the profit of that contract alone, and charge site expenses to the same project, which is its cost center. Integration with the Fatoora platform in Phase 2 of e-invoicing is also available from the Pro plan. If you run several projects, see accounting software for real estate and contracting, accounting software for construction companies, and the glossary term construction accounting.
Contractor agreement template: frequently asked questions
What employers and contractors ask before they fill in and sign the contract.
Does the contractor agreement template replace a lawyer’s review?
No. The template is a draft that gathers the contracting terms for the two parties to agree on, with the article number next to each clause the Civil Transactions Law governs. The agreed clauses, such as retention, the warranty period and how disputes are resolved, need a lawyer’s review before signing, especially if you agree on arbitration.
Can a construction contract include a delay penalty?
Yes. Article 178 of the Civil Transactions Law lets the parties agree the compensation in advance. Article 179, however, makes it not due if the contractor proves the employer suffered no harm, and allows the court to reduce it if it is excessive or if part of the works was carried out. That is why the template leaves the amount and its cap blank.
When is the contractor owed progress claim payments?
Where the work is in stages or priced per unit, the contractor is owed the value of what it has completed once the employer inspects and accepts it, under Article 469. That is why the progress claim schedule in the template has an inspection and acceptance date column before the net payment column.
Does the contract price go up if material prices rise or the design changes?
In a lump-sum contract on an agreed design, the contractor cannot claim an increase because material prices or wages rise. Nor can it claim one for a design change, unless the change results from the employer’s fault or was made with the employer’s permission and agreement to the increase (Article 471). If exceptional, unforeseeable circumstances of a general nature arise, the court may restore the balance of the contract. That is why the template records every change in a written, priced variation order.
Is VAT added to a construction contract?
Yes. Contracting and construction services in the Kingdom are taxed at 15% according to the ZATCA Guideline for the Real Estate Sector under VAT, if the contractor is VAT-registered. A resident, registered contractor issues an electronic invoice for each progress claim.
Does the template work for a shell construction contract?
Yes. You enter shell works in the type of works field, and in the materials table you set who supplies the structural materials and who supplies the finishing materials, if finishing is part of the contract. The same template works for finishing and turnkey contracts, and it is available in PDF and Word.
Download the contractor agreement template in PDF or Word
The template is available in PDF and Word, with an 11-item checklist before the signature boxes. The last item is a check of the building permit and insurance requirements on the Balady platform.