Your contract should include the items listed below. Scroll down for a thorough overview, or click the links below for a summary of each item. Keep in mind that this is simply a guide - contracts vary significantly by project.

CONTACT INFORMATION
It seems obvious, but make sure that you include in the contract the contractor's name, physical address, phone number, contractors all-risks insurance policy number and VAT registration number (if applicable). If there is ever a dispute, you will need to know where the company is located (you can't serve a summons if you don't have a physical address - a post office box number won't do!).
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SCOPE OF WORK
Require a complete description of the work to be done. This includes the overall scope of the work as well as individual aspects of the project; from foundation and framing to all finish work required. The type and quality of all materials should be spelled out, including manufacturers, brand name, quantity, weight, colour, style, and size. Be sure allowances for fixtures, floor coverings, etc. are sufficient to provide you with the level of quality you require. In addition, indicate all equipment, such as scaffolding or cement mixers, which will be used over the course of the project. If you have architectural plans, include them in this section as well.

If you decide to change the scope of the work during the job by either adding or subtracting items, you should make sure there is a written variation order, with project cost and timing changes signed off on by both the contactor and yourself.
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PROJECT SCHEDULE
Clearly define the project's start date, and secure from your contractor the approximate length of time it will take to complete the project. At the outset, ask that your contractor convey all potential conflicts that might arise due to other projects with which he or she is concurrently involved. You will find that most contractors are reluctant to sign a contract that includes late penalty clauses, but it still may be an item that you care to pursue. Finally, specify the time that workers will arrive and depart each day, and mention the days, if any, that they are not to work.
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Note: If financing is necessary, be certain that a clause is added stating that the contract is void or suspensive until financing is obtained.
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BUILDING PLANS & PERMITS
Be sure the contractor states in writing that he/ she will submit any building plans needed to the local authorities, obtain all necessary permits and arrange for all inspections required. If the work does not pass inspection, the contractor must bear the cost of corrections.
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INSURANCE
Make sure to do your homework on your contractor's insurance. Make sure that your contract mentions that the contractor has all risks insurance. This should include, but may not be limited to, general liability and worker's compensation for his or her employees.
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CONTRACT CANCELLATION
In nearly all cases, a contract may be canceled within three days after you've signed it - simply send written notice by registered mail and request a signed receipt from your contractor.
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CONFLICT RESOLUTION
In order to prepare for conflicts between homeowner and contractor that cannot be resolved, all contracts should include clauses specifying what forms of arbitration should be conducted and by whom.
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BUILDER'S LIENS
Your contractor has an automatic builder's lien over the improvements he or she makes to your property. This is a legal common law claim to real property until a debt is paid. If you aren't comfortable with this, make sure the appropriate language is in the contract forbidding it. 

Lending institutions have a standard waiver of builder's lien document that the contractor will have to sign before receiving any payments from them on your behalf. But if you're paying cash - be aware of this lien.

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WARRANTIES
Make sure the written guarantee on both labour and materials is included. This warranty should include the name and address of the party who will honour the guarantee. Also, the contract should stipulate if it is either a "full" or "limited" warranty. An average warranty for labour is for a minimum of one year. Require that you be given all written warranties provided with any appliances, materials or equipment used in the project.
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PUNCH LISTS
A punch list is an American term for a running tally of all outstanding items related to the project that the contractor must address. Include in the contract a clause stating that both the homeowner and the contractor must sign off on all items detailed on the punch list before the project can be deemed complete.
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