Most of the money in a construction contract is won or lost in a handful of clauses you might be tempted to skim. Before you sign, read for the ones that bite: indemnity and hold-harmless, pay-when-paid or pay-if-paid, notice deadlines, delay and force majeure, termination, and the dispute-resolution clause. On a CCDC job the single most important habit is to read the supplementary conditions as carefully as the base form, because that is where an owner quietly rewrites the deal in its favour. If you do not understand a clause, get it explained before you sign, not after a dispute starts.
Indemnity and hold-harmless
An indemnity clause says one party will cover the other's losses if certain things go wrong. A hold-harmless clause is its close cousin, releasing the other party from liability. The danger is a broadly worded indemnity that makes you responsible for losses well beyond your own fault, including the other side's mistakes or indirect and consequential damages. The balanced CCDC position is the benchmark: in CCDC 2-2020 and CCA 1-2021, indemnification is capped to direct losses only, with indirect, consequential, punitive and exemplary damages expressly excluded. If a supplementary condition or a custom contract strips that cap out and asks you to indemnify against everything, that is a clause to negotiate or price for, not to wave through.
Pay-when-paid and pay-if-paid
This clause decides whether you carry the owner's insolvency risk. A pay-when-paid clause is about timing: the contractor pays you when it gets paid, which courts treat as allowing a reasonable delay, not a never. A pay-if-paid clause is a condition precedent: the contractor only has to pay you if it is itself paid, which pushes the risk of the owner not paying down onto you. Canadian courts dislike pay-if-paid and enforce it only where the language is completely unambiguous; ambiguous wording is read as mere timing. In the prompt-payment provinces the clause is undermined regardless, because you have a statutory route to an interim payment order (see Prompt Payment Explained). Read this clause closely and, if it is a hard pay-if-paid, get advice.
Notice deadlines: the clause that quietly kills claims
Buried in most contracts is a requirement to give written notice of a claim within a tight window, often a set number of working days from when the event arises. Miss it and a perfectly valid claim can die on procedure alone. In Elite Construction v. Canada (2021), an Ontario court dismissed a $4.1 million extras claim outright because the contractor missed the contractual notice period of 10 working days, even though the underlying claim had merit. Find every notice clock in your contract, diary it, and treat written notice as non-negotiable.
Delay, extension of time and force majeure
The delay clause sets out what entitles you to more time, and sometimes more money. Under CCDC 2, GC 6.5 grants an extension of time (but generally not extra money) for delays beyond your control, including owner acts, changes, labour disputes, fire, abnormal weather and force-majeure events, but only if you give prompt written notice. The COVID period exposed a gap that better contracts now close: older force-majeure clauses gave time only, not the cost of standing by and re-mobilising. Modern drafting names pandemics and government shutdowns explicitly, gives both time and defined extra cost, and sets a clear notice clock of roughly 5 to 10 business days. Check whether your clause covers cost or only time, and what triggers the notice.
Termination
The termination clause is the highest-risk part of any contract, because terminating wrongly can itself be a repudiation that exposes you to damages. Under CCDC 2 (GC 12), the terminating party must first issue a written notice of default specifying the breach and allow a minimum of 5 working days to cure (or to start curing), and only then a second notice ends the contract. That two-step process cannot be short-circuited: an owner who locks out a contractor without following it may itself be in breach. Look for whether the contract also allows termination for convenience (the 2025 CCDC 5A and 5B forms introduced it), and if so, check the compensation formula covers your work to date, demobilisation and ideally a share of lost profit.
The dispute-resolution clause
Finally, find out how a fight gets resolved before you are in one. The clause may require negotiation, then mediation, then arbitration, or it may leave you free to go to court. An arbitration clause matters because it generally replaces a court trial for that dispute, in private, and can prevent you using small claims. None of this overrides your statutory rights: prompt-payment adjudication and your lien (or, in Quebec, the legal hypothec) remain available no matter what the contract says (see Dispute Resolution Options).
Common mistakes
- Skimming the supplementary conditions. The base CCDC form is balanced; the owner's add-ons are where you get hurt.
- Signing a broad indemnity. Without a direct-loss cap you can be on the hook for the other side's losses.
- Missing a notice clock. Elite Construction shows a sound claim can die purely on a blown deadline.
- Reading the termination clause for the first time mid-dispute. Get the cure-notice steps clear before you ever need them.
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