When and how to conclude a work contract

What is a works contract and when to conclude it

When we say “works contract”, many of us probably first think of a painting or a sculpture. However, we can think of a work as anything from a magazine article to computer software, a program, an e-shop or a bespoke app to a piece of craft work. At least a simple contract for a work is thus quite common among freelancers in various industries, developers or even translators. On what occasions is it appropriate to conclude a work contract?

When to conclude a contract in writing

We often come across a contract for work in everyday life and it may not be obvious to us that we are entering into a contract for work. For example, when repairing shoes or cleaning a suit at the dry cleaners, none of us probably signs a written contract, or only a sample work order is signed.

However, a model work order will often not allow for the negotiation of more detailed and detailed terms and conditions that the customer might insist on. On the other hand, for example, in the case of a house renovation or a major car repair, a good written work contract should already be a matter of course. This will prevent many problems and disputes that we unfortunately encounter in practice with our clients.

If you are entering into a contract for a future contract where, for example, the construction of a house is dependent on the purchase of a specific plot of land, then we always recommend that you enter into a written contract. However, this applies to all constructions and renovations.

We recently dealt with a case for a client where he decided to go for a cheap quote to renovate his cottage and the contractor then failed to deliver, constantly asking for more money for materials and the client even had to drive his own car to the site. Unfortunately he paid most of the money up front without a written contract and so would be in a tight spot.

What every works contract should contain

Do you know what the 12 elements of a works contract should contain to really protect both parties well? How do you view a work contract under the Commercial Code? A framework works contract is a bilateral contractual relationship between the client and the contractor. A work is precisely the making of a thing, the maintenance, repair or modification of a thing, or an activity with a different result. It is, in short, an activity that does not fall under a classic contract of sale, as the Civil Code says about a contract for work.

The contract should include

• A) Identification of the contracting parties – i.e. details of each contracting party. Do not forget the names or company names, registered offices, identification numbers, details of registration in the commercial register and ideally the bank details and the name of the company’s representative, including contact details if the contract is entered into on behalf of the company. Now you may be wondering why we mention such basics. But you’d probably be surprised how many people get it wrong on the very first point.
• B) Defining the terms used – for more complex matters, it pays to define the termsyou use in the contract in addition to the parties. The purpose is to make things clear for everyone involved and to avoid double interpretation of terms. Therefore, be sure to mention exactly what is meant by defects, in which cases they are minor defects and indicate exactly which law governs the issue.
• C) Subject matter of the contract – the next step is to describe the subject matter of the contract, i.e. the work itself, in as much detail as possible. This is absolutely crucial. For example, it is worth investing in a visualisation of the work or at least a list of required functionalities. At the same time, it is necessary to state the formalities, i.e. that the work will be completed within the time specified in the contract and at the price specified in the contract.
• D) Deadline for performance – the previous point is linked to the need to directly specify the date by which the work will be handed over to the client. Completion may be carried out in stages, and this must also be taken into account. Subsequent acceptance of the work should be confirmed by the signatures of both parties; a special handover protocol is usually recommended, a model of which may already be included in the contract.
• E) Price – in addition to the deadline, we must not forget to mention the price for the work. This can be set in different ways – as a final amount or as a slightly less strict budget. However, pay attention to this and also pay attention to the adjustment of the so-called extra work.
• F) Place of performance – if a works contract is signed for construction work or other activity to be carried out at a specific location, for example at the client’s office, it is necessary to specify the place where the work will be carried out in addition to the time and price. This is usually logical, but it protects the parties in case of a dispute.
• G) Contractor’s Obligations – Further, the contract should not be missing the obligations of both parties. As far as the contractor is concerned, there we mainly state the obligation to carry out the work in accordance with the contract, on his own responsibility, on his own behalf and with due care. The contractor also declares that he has acquainted himself with all the details and has been supplied with everything he needs to carry out the work. This is also key, avoiding disputes later on. If the contractor also uses his colleagues or employees to carry out the work, he undertakes that these are only competent persons who meet all the legal requirements for the activity.
• H) Obligations of the client – the client has considerably fewer obligations necessary for the execution of the work. In addition to the payment of the agreed amount for the work, these include the provision of all information and documents that the contractor needs to create the work. If the subject of the contract is building alterations to the house, access to the property is of course required. It is in the cooperation that the “dog” may be buried. It is therefore advisable to consider the necessity and scope of the cooperation well, also because of the deadlines and the scope of the work. In our experience, this is particularly evident in IT projects, where cooperation and testing by the client is absolutely necessary.
• I) Copyright and Intellectual Property – rights and obligations come with the treatment of copyright and intellectual property. Copyright deals with works that are the result of the creative activity of the author, i.e., for example, paintings, graphic, verbal or architectural works, as well as computer programs. Sometimes a licence agreement is sufficient. If the client provides the contractor with confidential and professional information, such as drawings and designs, these documents are the intellectual property of the client, which should also be addressed in the contract. Incidentally, confidentiality is usually expressly included in the contract. Beware of the so-called “vendor lock-in”, i.e. a situation where part of the licence is not transferred to the client, who then has to remain loyal to the same vendor even in new projects if he wants to have mutually compatible applications, for example.
• J) Liability for damages and defects in the work – the contract should also specify liability for damages and defects. Usually, the contractor is liable for any damages until the work is handed over to the client. This includes not only damage to the work itself, but also to materials or equipment. The contractor should therefore take out the necessary insurance and ensure that all equipment is stored safely. The contractor is also liable for defects in the work which have arisen during the execution of the work or have been caused by improper execution and have become apparent after the work has been handed over. The contractor should repair such defects at his own expense. This is perhaps one of the most important parts of the contract – it is the liability that is examined if there is a problem. Often the works are part of a complex solution, so the damage is not just caused by a malfunctioning delivery, but also by the shutdown of the entire operation or perhaps lost profits from a malfunctioning e-shop. It is therefore advisable to include the servicing of the work in the contract.
• K) Penalties – any penalties for failure to meet a deadline or other obligation should be part of any contract. The contractual penalty is usually set as a fixed amount or as a percentage of the price of the work for each day of delay. The contract should also specify how and when any penalties will be paid.
• L) Withdrawal from the work contract – withdrawal from the contract should also be mentioned in connection with penalties. This can also be used to deal with long delays in the delivery of the work. It can be defined in the contract that if the delay lasts for a certain number of days, the client has the right to withdraw from the contract. Another reason for withdrawal may be the contractor’s unwillingness to remedy defects arising during the performance of the work, even after written notice from the client. We have discussed the termination of the work contract in a previous article.

Framework contract for work (construction) – model

To get a better idea of what such a construction contract should look like, let’s show a sample in which the parties have agreed to construct a building:

WORK CONTRACT

A) Identification of the contracting parties

Client:
Jan Novák
apartment: Sluneční 123, 100 00 Prague 10
birth number: 750101/1234
account number: 123456789/0100 (Komerční banka)
phone: +420 777 123 456
e-mail: jan.novak@email.cz

Contractor:
Stavby s.r.o.
registered office: U Hřiště 456, 250 88 Čelákovice
ICKO: 123 45 678
DIC: CZ12345678
registered in the Commercial Register maintained by the Municipal Court in Prague, Section C, Insert 98765
bank account: 987654321/0800 (Česká spořitelna)
represented by: Ing. Petr Malý, Managing Director
telephone: +420 606 987 654
e-mail: info@stavby.cz

B) Definition of terms used

Work – a detached brick garage measuring 6 × 4 m with a pitched roof and sectional garage doors, including the foundation slab and connection to electricity.

Defects in the work – any deviations from the agreed execution of the work, in particular aesthetic, functional and safety deficiencies.

Minor defects – means defects that do not prevent the garage from being properly used for the purpose for which it was intended.

Relevant legislation – Act No 89/2012 Coll., Civil Code.

C) Subject matter of the contract

The contractor undertakes to carry out the work specified as a brick garage for the client in accordance with the project documentation dated 1 April 2025 drawn up by Projekty s.r.o. The client undertakes to accept the work and pay the agreed price for it.

The work also includes the necessary permits, site preparation, disposal of construction debris and final site clean-up.

D) Time limit for performance

The contractor undertakes to start the works no later than 30 days after the signing of this contract, i.e. by 29 May 2025.
The work shall be completed and handed over no later than 30 September 2025.
Handover shall be confirmed by signing a handover report.

E) Price

The contractual price for the entire work is CZK 480 000 excluding VAT.
VAT of 12 % will be added according to the legislation in force.
The price includes all costs of the work, including transport and materials used.

Extra work will be carried out only by written agreement of the parties and will be invoiced separately.

F) Place of performance

The work shall be carried out on plot No 789/12 in the cadastral area of Prague-Hostivař.

G) Obligations of the contractor

The Contractor undertakes to:

• perform the work properly, on time and in accordance with the contract, project documentation and legal regulations,
• use only materials of the agreed quality,
• secure the construction site and be liable for any damage caused to the construction site and neighbouring properties,
• ensure that the persons working on the work are professionally qualified.

H) Obligations of the client

The Client undertakes to:

• provide the contractor with timely access to the construction site,
• provide the necessary assistance and documentation for the execution of the work,
• pay the price of the work according to the terms of this contract.

I) Copyright and intellectual property

The project documentation is the intellectual property of Projekty s.r.o. The Client has the right to use it exclusively for the implementation of this work.

J) Liability for damages and defects in the work

The Contractor shall be liable for damages incurred during the execution of the work and for defects that become apparent after the handover of the work within the warranty period of 60 months.
The contractor is obliged to remedy defects at his own expense within 30 days of notification.

K) Penalties

The contractor shall pay the client a contractual penalty of CZK 2,000 for each day of delay.
For the Client’s delay in paying the price of the work, the Client shall pay a contractual penalty of 0.05% of the amount due for each day of delay.

L) Withdrawal from the contract

The Client is entitled to withdraw from this contract if the Contractor’s delay in completing the work exceeds 30 calendar days or if the Contractor fails to remedy defects even after repeated written notice.

Prague, 29 April 2025

Client:
Jan Novák
(signature)

Contractor:
Stavby s.r.o.
Ing. Petr Malý, Managing Director
(signature)

You can finddownloadable templates of the contract of work on many websites. However, keep in mind that such templates may be outdated, too general and will not contain specific details for your work. We therefore always recommend that you have a lawyer draft the contract to advise on the correct wording and protect your rights.

Definition of the work

As we stated above, the key point in the contract should be the definition of the work itself, i.e. the specification of the work to be performed for the customer.

The more general the description, the more freedom the contractor will have to create the work and the customer will not know, beyond the general level, in what form he will receive the work. If the work is described in general terms, the customer would also not be able to claim that the work does not correspond to his specific ideas.

In this respect, caution should be exercised when using the free downloadable model works contracts. If you type, for example, a works and construction contract into a search engine , the template will never contain a consistent definition of the work as it should fit your particular situation and need.

If the work is not defined at all or is described vaguely, the contract could be invalid. Worse, however, is when the work does not meet the need because of a mis-specification. An example might be a tailored shirt in a defective colour.

Time limit for completion of the work

It is important for both parties to set a deadline by which the work is to be completed. The customer will know when they will be able to move into their new house, while the contractor will be able to plan future jobs. In case of failure to meet the completion date, it is advisable to negotiate a contractual penalty. With a contractual penalty, the customer will have more options to make the contractor meet the deadline. In the event of a longer delay, the customer could also withdraw from the contract and demand a refund.

Payment terms

The payment terms should also be defined as precisely as possible in the contract. The tradesman carrying out the work will need advances during the course of the work in order to carry out the work. The client, on the other hand, will expect to pay part of the price for the work after it has been completed, in case it is poorly done. It is therefore important to set not only the price for the entire job itself, but also the amount and due dates of the individual deposits.

Clearly set payment dates in advance will allow both parties to plan their finances and meet their obligations in a timely manner. Often the contractor will insist on negotiating a penalty or liquidated damages in the event that he records unpaid invoices with the customer.

Addendum to the works contract or works contract and construction

As we have already said, works contracts are common, especially in the construction industry. These works contracts are usually detailed and include solutions to possible situations that may arise during construction. Often, however, it is in the case of construction that changes to the work are made during the construction process. As a rule, few buildings are constructed completely without any changes in accordance with the project documentation.

Changes to the construction are in the nature of multiple works or represent a real change to the work consisting in a different structural and technical solution. Such a situation is usually dealt with in the form of amendments to the works contract.

Guarantee

Although the contractor is generally liable for the fact that the work will be free from defects at the time of completion, he is no longer liable for defects that arise in the future. However, it is possible to negotiate a so-called guarantee under which the contractor undertakes to remedy defects that occur over a certain period of time.

The guarantee is particularly important for the customer when concluding a contract for construction work, where the lifetime of the construction is expected to be decades. Even if the contractor hires third parties, so-called subcontractors, to complete the work, the customer does not enter into a contract with them. He is still in a contractual relationship with the contractor himself, with whom he signed the contract, and he is also liable for defects, even if they are caused by the subcontractor.

Summary

A works contract is used when the collaboration is to result in a specific activity – for example, an article, software or construction work. It is common among freelancers, developers or craftsmen. For small jobs (e.g. shoe repairs) it is usually concluded verbally, but for more complex projects (e.g. house renovations) the written form is crucial – it protects both parties and prevents disputes.

A good contract should include: a precise identification of the parties, a definition of the terms used, a detailed description of the work, the completion date, the price (including terms for multiple works), the place of performance and the obligations of both parties. It is also important to provide for copyright, liability for defects, penalties and the possibility of withdrawal from the contract. For technical or creative works (e.g. software), intellectual property and licensing must also be addressed.

In the construction industry, changes during construction are common and need to be dealt with by addenda. Negotiating a guarantee is advantageous for the client – it ensures that defects are repaired after the work has been handed over. Payment terms (including deposits) must be set in advance, as well as penalties for failure to meet deadlines.