As an Arizona contractor, your reputation and your bottom line often depend on one thing: the strength and clarity of your contracts. Too often, small contractors use vague, generic, or incomplete agreements only to find themselves in a payment dispute, stuck with extra work they didn’t budget for, or facing legal trouble.

Below, we’ll look at the top five clauses every Arizona contractor should have in their contracts , with a deep dive into three of the most critical: Clear Payment Terms, Scope of Work Definitions, and Change Orders .

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1. Clear Payment Terms

Why It’s So Important
Payment disputes are among the most common (and costly) contractor headaches. Without clear payment terms in writing, you risk:

• Late payments (or no payment at all)

• Disputes over how much is owed

• Cash flow problems that can stall other jobs

• Needing to file costly liens or lawsuits

A well written payment clause protects both parties by spelling out exactly how and when you get paid. It also sets expectations for your client from day one, reducing misunderstandings and tension.

Common Mistakes Contractors Make
✅ Not specifying payment schedule (e.g., deposit, progress payments, final payment)
✅ Failing to define what triggers payment (inspection, milestone, date)
✅ Omitting late payment penalties or interest
✅ Not stating accepted payment methods

Best Practices

• Break large projects into clear milestones with payment triggers.

• Define consequences for late payment (reasonable interest or fees).

• Include a “right to stop work” clause if payments aren’t made on time.

• Specify acceptable payment methods (check, ACH, etc.).

Example Clause (Simplified):

“The Owner shall pay Contractor 30% upon contract signing, 40% upon framing completion, and 30% upon final inspection. Payments due within 10 days of invoice. Unpaid balances accrue interest at 1.5% per month.”

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2. Scope of Work Definitions

Why It’s So Important
The Scope of Work (SOW) defines exactly what you’re doing and just as importantly, what you’re not doing. Without a clear SOW:

• Clients may assume extra work is included.

• You can’t defend yourself against “scope creep.”

• Pricing disputes become inevitable.

In Arizona’s competitive market, where many projects have tight budgets and schedules, a vague scope is an open invitation for conflict.

Common Mistakes Contractors Make
✅ Using generic language like “complete renovation” without specifics
✅ Failing to itemize included materials or finishes
✅ Ignoring exclusions (e.g., landscaping, permits, design fees)
✅ Forgetting to define client responsibilities (e.g., access to site, utilities)

Best Practices

• List tasks and deliverables in detail.

• Include specs on materials, brands, models.

• Clearly exclude anything you’re not doing.

• Get client sign-off before starting work.

Example Clause (Simplified):

“Contractor will install 200 linear feet of 6’ cedar privacy fencing with 4x4 pressure-treated posts set in concrete. Excludes staining, removal of existing fence, or landscaping.”

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3. Change Orders

Why It’s So Important
Even with the best planning, changes happen. Clients want upgrades. Conditions on site differ from what was expected. Without a robust change order clause, you can end up:

• Doing extra work for free.

• Disagreeing over revised pricing or schedule impacts.

• Exposed to legal or lien disputes.

Arizona contractors often lose money because they’re afraid to insist on signed change orders—or they don’t have a process at all.

Common Mistakes Contractors Make
✅ Doing extra work based on verbal approval only
✅ Forgetting to specify pricing for changes up front
✅ Failing to document time/schedule impacts
✅ Skipping client signatures

Best Practices

• Require all changes to be in writing.

• Include clear pricing or hourly rates for added work.

• Document schedule changes caused by the change.

• Get client approval (signature/email) before starting.

Example Clause (Simplified):

“Any change to the Scope of Work must be approved in writing and may adjust the Contract Price and Schedule. Contractor shall provide a Change Order detailing such adjustments.”

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4. Dispute Resolution

When conflicts arise, your contract should outline how they’ll be resolved. This can include:

• Mediation before litigation

• Choice of venue (e.g., Arizona courts)

• Who pays legal fees

This can save both parties money and time by avoiding costly lawsuits.

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5. Termination Clause

You need the right to stop work if the client fails to pay or otherwise breaches the contract. Likewise, the client should know under what conditions they can terminate you.

Clear termination terms help protect you if the project goes south.

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The Bottom Line

Your contract is more than paperwork it’s your most important tool for getting paid, setting expectations, and protecting your business. By investing time in clear payment terms, well-defined scope of work, and a robust change order process , you’ll avoid the most common (and costly) pitfalls Arizona contractors face.