What to pay attention to in the general contractor contract

When you build a house, numerous parties are involved in its realization. From architects to carpenters, bricklayers, plumbers, plasterers, and electricians: dozens of trades will work on your project. To avoid having to manage all the tradespeople and subcontractors individually, you can hire a general contractor.

The general contractor, whether an individual or a company, oversees and coordinates all construction work. With the exception of the architectural work, they are responsible for the execution of all work and are therefore your sole point of contact.

You are bound to the general contractor by a contract that covers all construction work, including site management. The general contractor is tasked with implementing the construction project clearly defined in this general contractor contract. They plan the various construction phases from A to Z and assume responsibility for selecting the various tradespeople and subcontractors who will then carry out the construction work.

Larger construction projects, such as building a house or extensive renovations, require the coordination of multiple trades and adherence to budgets, deadlines, and legal requirements. To ensure everything is carried out correctly and completed on time, you place a great deal of responsibility on the general contractor. For this reason, it is essential to do your due diligence in advance before selecting the general contractor for your construction project.

Ask your chosen company or individual for references. Don’t hesitate to contact previous clients and obtain their opinion on their capabilities and reliability. You can also ask your general contractor for a debt collection agency statement, request a credit check from your bank, and check the commercial register. This will help you avoid choosing a partner at risk of bankruptcy.

Finally, make sure the general contractor’s work is covered by liability insurance. This insurance must cover, at a minimum, personal injury and property damage, but also construction defects. Some insurance policies may offer more extensive coverage.

The general contractor tasked with implementing the construction project must usually engage subcontractors to carry out the various trades within the project. These subcontractors are therefore contractually bound to the general contractor, not to you as the client. You have only a contractual relationship with the general contractor. The general contractor is responsible for the tendering process, the selection of contractors, contract negotiations, the supervision of the work, and their remuneration.

If the general contractor engages subcontractors to fulfill its contractual obligations, it is solely responsible for coordinating the partners involved. It therefore bears full responsibility to you as the client. It typically also bears the financial risk associated with potential construction defects by the subcontractors.

Contracts between building owners and general contractors are not governed by specific legal provisions. SIA Standard 118 “General Conditions for the Execution of Construction Work” can be applied in whole or in part. This standard covers the rights and obligations of the parties in the event of construction delays, construction defects, budget overruns, and other disputes. Please note that a mere reference to the standard represents only a non-binding general acceptance. Specific provisions in the work contract, however, are binding.

Apart from that, the general contractor contract is an individual work contract within the meaning of Articles 363 et seq. of the Swiss Code of Obligations (OR). This consists of the contract itself, i.e., the contractual document, and the general terms and conditions. These two documents are usually supplemented by contract annexes, such as plans, building specifications, a bill of quantities, and a payment schedule.

When drafting the general contractor contract, you should pay particular attention to the following points:

• Subject of the work contract: This determines what the general contractor is to produce and deliver. In a new construction project, this could be the turnkey house.
• Plans and construction specifications: These form the basis for the construction work to be carried out. The more precise they are, the better misunderstandings and disputes can be prevented. Make sure there are no errors.
• Price of work: With the general contractor contract, you specify a fixed total amount. It’s best to specify how and when this amount is to be paid with a payment schedule that matches the construction progress.
• Date of delivery: This specification ensures that your construction project has a contractual completion date. This way, the general contractor knows when the work must be completed, and you can plan for moving in, for example, if you’re building a new house. Also specify what happens if a deadline is missed.
• Special agreements: Specify, for example, how later requests for changes and their associated costs are to be handled, or how the contract can be terminated.

Model contracts such as those from SIA or VSGU can provide a good basis, but they must be adapted to your construction project. Legal advice is recommended in this regard.

The biggest advantage of using a general contractor is that you delegate responsibility for individual projects. The general contractor is responsible for selecting subcontractors, coordinating the work, and ensuring their correct execution. This means that you, as the client, have a single point of contact, even if a dozen trades are involved in your project.

In addition, the general contractor offers you guarantees for quality and sometimes also for adherence to the construction schedule. Furthermore, the general contractor contract often stipulates that the general contractor bears any additional costs.

However, hiring a general contractor also has disadvantages. Since the general contractor is responsible for the entire project, you no longer have control over the decisions made – especially regarding subcontractors. This entails risks, such as reduced or inadequate protection against defects and damage.

If the general contractor becomes insolvent, you could also find yourself in a financial and contractual situation that is difficult to resolve. This is why it is so important to select the general contractor carefully.