Contract conditions and special terms
The contract conditions of a UK tender set price, payment, retention, liability and termination. The clauses to check before you price and submit a bid.
Updated on September 5, 2026
The contract conditions are the part of the tender pack that fixes the commercial, legal and financial rules of a specific contract: the form of price, payment terms, programme, liability caps, bonds and retention, remedies and termination. In United Kingdom practice they take the form of a standard set of terms plus the contract-specific material that tailors it.
How it works
That contract-specific material has different names depending on the standard form used, but always the same function:
- the order form and schedules in the Crown Commercial Service Public Sector Contract and Model Services Contract;
- the Contract Data Part One and Part Two in NEC4, which is where the employer and the contractor insert the actual dates, rates, limits and options;
- the Contract Particulars and the schedule of amendments in JCT works contracts;
- a set of special terms or a Z-clause schedule that departs from the standard wording.
Typical headings are the contract period and any extension option, the form of price and how it is adjusted, payment terms and milestones, any advance payment, retention or performance bond, liquidated damages and service credits, insurance levels, subcontracting and assignment, intellectual property, and grounds for termination.
The Procurement Act 2023 fixes part of this by law rather than by negotiation. Section 68 implies a 30-day payment term into every public contract, running from receipt of the invoice or, if later, the date payment falls due under it (verified 2026-09-05); concession contracts, private utilities contracts and certain school contracts are outside it. The Act also requires key performance indicators on larger contracts, with performance against them published during the life of the contract.
What it means for a bidder
The contract conditions determine your cash flow and your risk. Before pricing, check the payment terms and milestones, whether retention applies and at what percentage, whether a parent company guarantee or a performance bond is required, and how the price is adjusted. On a multi-year contract with no indexation, every input cost increase is yours to absorb.
Read the damages and service credit clauses closely: an uncapped liability or a daily rate with no ceiling can make an otherwise attractive contract dangerous. Then read the schedule of amendments, because that is where a buyer quietly hardens a familiar standard form.
You cannot counter-offer in your tender unless the procedure allows negotiation; qualifying your bid gets it disqualified. You can, and should, raise a problematic clause as a clarification question during the tender period.
Example
A county council lets a four-year lift maintenance contract for its schools, valued at about £900,000. The conditions provide for annual indexation against a published index, service credits for missed response times capped at 10 per cent of the annual charge, the statutory 30-day payment term, and a performance bond that may be replaced by a parent company guarantee. A lift SME prices those terms in and opts for the guarantee to protect its working capital.
Frequently asked questions
What is the difference between these and the standard form?
The standard form is published and reused across many contracts. The conditions here are the contract-specific completions and amendments layered on top of it.
Can I propose my own terms of business?
No. Attaching your standard terms is a qualification of the tender and will normally make it non-compliant.
Can I challenge a clause after signature?
In practice, no. Accepting the terms at tender binds you, which is why they must be read before you price.