Introduction
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.
Poorly drafted construction contracts often become the starting point for payment disputes, delay claims, variation conflicts, and litigation across Bahrain construction projects. Clear contractual procedures and legally enforceable clauses are critical to reducing project risk and protecting stakeholder interests.
In this blog, we expound on our take on 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.
Unclear Scope of Work & Contractual Obligations
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.
Delay Exposure & Missing Liquidated Damages Clauses
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”).
Variation Order Risks & Unapproved Scope Changes
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. This would include undocumented design changes, revised specifications, and additional construction works
Missing Arbitration & Dispute Resolution Procedures
Many contracts leave out what happens if things go wrong , with 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.
Payment Certification & Cash Flow Disputes
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, which include delayed certifications, disputed valuations, retention withholding, and milestone disagreements
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.
Retention Money & Advance Payment Risks
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.
Force Majeure, EOT Claims & Unforeseen Delay Risks
Without a force majeure clause, parties may be unfairly penalised 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 of How Poor Contract Drafting Led to a Construction Dispute
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.
Conclusion
Construction contracts form the legal foundation of every Bahrain construction project. Unclear clauses, undocumented variations, missing dispute procedures, and weak payment terms can quickly escalate into costly delays, claims, and litigation.
Careful contract drafting, structured approvals, and early legal review help reduce disputes and protect all parties throughout the project lifecycle.
