Common Legal Mistakes in Construction Contracts (And How to Avoid Them in Bahrain)
Construction projects in Bahrain involve multiple parties, high-value transactions, strict timelines, and technical deliverables. With so much at stake, a well-drafted construction contract isn’t just helpful it’s essential. Unfortunately, many developers, contractors, and consultants sign agreements filled with vague clauses, missing terms, or legal gaps that later result in costly disputes.
In this blog, we highlight the most common legal mistakes in construction contracts, explain their consequences, and show how to avoid them through proper planning, legal review, and practical awareness. A general illustrative example is also included to show how such mistakes can unfold in real-world scenarios.
Mistake #1: Vague or Missing Scope of Work
One of the most frequent errors is failing to clearly define the scope of work. Ambiguities in what must be done, by whom, and to what standard often lead to disputes about deliverables, timelines, and variation orders.
How to avoid it:
Include detailed specifications, drawings, and deliverables in the contract or appendices. Make sure both parties agree on what’s included and excluded.
Mistake #2: No Defined Completion Date or Penalties
A contract without a specific completion date, or one that lacks liquidated damages for delay, leaves the project owner vulnerable. It becomes difficult to claim compensation for late handover, and contractors face no pressure to stay on schedule.
How to avoid it:
State the exact deadline for completion and include a fair, enforceable liquidated damages clause (e.g., “BHD 500 per day for delay beyond X date”).
Mistake #3: No Mechanism for Variations
Construction projects often change midstream. If the contract doesn’t clearly explain how to request, approve, and price variation orders, disputes are inevitable.
How to avoid it:
Include a clause that defines the variation process requiring written instructions, documented pricing, and time impact assessments for each change.
Mistake #4: Ignoring Dispute Resolution Clauses
Many contracts leave out what happens if things go wrong no mention of dispute resolution, jurisdiction, or arbitration. This leads to confusion and delays when conflicts arise.
How to avoid it:
Insert a clause specifying the forum (litigation or arbitration), location, applicable law, and institution (e.g., BCDR, ICC). This provides a roadmap when disputes arise.
Mistake #5: Overlooking Payment Terms and Schedules
Some contracts don’t clarify how and when payments are to be made — or they link payments to vague milestones. This causes tension, delays, and funding gaps.
How to avoid it:
Break down payments into defined stages (e.g., excavation, concrete works, MEP) and tie each to site progress, consultant approvals, or certificates. Specify due dates, penalties, and withholding rights.
Mistake #6: No Retention or Advance Payment Clauses
Failing to address retention money or advance payments is risky for both sides. One party might withhold funds unjustly, or the other may disappear after receiving an advance.
How to avoid it:
Include clauses covering retention percentages, release conditions, and any required advance payment guarantees to protect funds.
Mistake #7: No Force Majeure or Extension of Time Provisions
Without a force majeure clause, parties may be unfairly penalized for delays caused by unforeseen events like pandemics, natural disasters, or regulatory changes.
How to avoid it:
Define force majeure events clearly and include a process for applying for extensions of time (EOT) when such events occur.
Example:
A contractor signed a BD 2 million contract for a luxury residential villa. The agreement included basic terms but omitted a dispute resolution clause, had no detailed scope of work, and did not define how variations should be approved.
Midway through construction, the project owner requested changes to the façade and internal finishes. The contractor implemented the changes but failed to submit formal variation requests. A disagreement later arose regarding the increased cost and timeline.
As tensions escalated, a lawyer was brought in to assess the situation. Without clear variation procedures, evidence of approval, or a defined dispute resolution path, the matter became complicated. Eventually, both parties had to resort to court resulting in a drawn-out, costly litigation that could have been avoided with a properly structured contract.
This example illustrates how poor drafting, missing clauses, and informal communication can lead to avoidable legal battles and financial strain.
How to Avoid These Mistakes in Bahrain
- Engage a legal expert early before signing the contract
- Use Bahrain-compliant contract templates or recognized models (e.g., FIDIC)
- Make sure every clause is clear, specific, and balanced
- Confirm that payment, delay, variation, dispute, and termination clauses are included
- Require all agreements and modifications to be in writing and signed