A construction contract is the binding written agreement between an owner (or general contractor, for subcontracts) and a contractor that defines the scope, price, schedule, and terms of a project. Contracts include the prime contract, the drawing set, specifications, addenda, and any incorporated documents like AIA general conditions.
The most common commercial contract types are fixed-price (lump sum), cost-plus (cost reimbursement plus a fee or percentage), and time and materials (T&M, hourly labor plus actual material cost with a markup). Each has different risk allocation between owner and contractor. Fixed-price puts overrun risk on the contractor. Cost-plus puts it on the owner. T&M is typically used for repairs and small undefined-scope work.