Turnkey Contract Template and How to Draft One (2026)

What is a turnkey contract, and when do you need one? A turnkey contract is a construction or engineering contract where one contractor takes responsibility for the whole project, from design through to a completed, working facility, and hands it over ready for the owner to "turn the key" and operate. The owner pays a largely fixed price and the contractor carries most of the design, procurement and construction risk. These are common for power plants, factories, process plants, infrastructure and large equipment installations. A turnkey contract is close to an EPC (engineering, procurement and construction) contract. In practice the two terms are often used for the same thing: a single point of responsibility, a fixed price and a defined completion date. You need one when you want certainty of price and time and a single party to hold accountable, rather than managing separate designers, suppliers and builders yourself. The widely used international model for this is the FIDIC Silver Book, the "Conditions of Contract for EPC/Turnkey Projects." Many Indian and cross-border projects adapt it. <!-- [VERIFY: current FIDIC Silver Book edition in use] --> This article is general guidance, not legal advice. The law here varies by jurisdiction and changes over time, so have a qualified lawyer review any agreement before you rely on it. ## Turnkey contract template Copy the block below and fill the bracketed fields. It is a plain-language starting point, not a substitute for a full FIDIC or project-specific form on a large build. ```

TURNKEY (EPC) CONTRACT This Turnkey Contract ("Contract") is made on [DATE] BETWEEN: [OWNER / EMPLOYER NAME], [address] ("Owner") AND [CONTRACTOR NAME], [address] ("Contractor") 1. SCOPE OF WORK The Contractor will design, engineer, procure, construct, test and commission [describe the facility / plant / works] (the "Works") and hand it over complete and fit for its intended purpose as set out in the Employer's Requirements in Schedule 1. 2. SINGLE POINT RESPONSIBILITY The Contractor is solely responsible for the whole of the Works, including design adequacy, fitness for purpose, and co-ordination of all sub-contractors and suppliers. 3. CONTRACT PRICE The Contract Price is a lump sum of [CURRENCY/AMOUNT], fixed except for the Variations and price adjustments expressly allowed in clause 9. 4. TIME AND COMPLETION The Contractor will achieve Completion by [DATE / within N months of the Commencement Date]. "Completion" means [the Works have passed the Tests on Completion and are ready for the Owner to operate]. 5. PAYMENT Payment is made against [milestones / monthly progress] in Schedule 2, less retention of [N]%. [Advance payment of [amount], recovered against later payments.] The Owner may withhold payment for defective work. 6. PERFORMANCE SECURITY The Contractor will provide a performance [bank guarantee / bond] of [N]% of the Contract Price, valid until [end of the defects period]. 7. TESTS AND ACCEPTANCE The Works must pass the Tests on Completion and the performance guarantees in Schedule 3 (for example output, efficiency, capacity). The Owner issues a Taking-Over Certificate when the Works pass. 8. DEFECTS LIABILITY The Contractor will remedy defects notified during the Defects Liability Period of [12 / 24] months after Taking-Over, at its cost. 9. VARIATIONS AND ADJUSTMENT The Owner may order Variations in writing; the price and time are adjusted as set out in Schedule 4. [Price adjustment for named cost indices applies as per Schedule 4.] 10. DELAY DAMAGES If the Contractor fails to complete on time, it pays liquidated damages of [amount] per [day/week] of delay, capped at [N]% of the Contract Price. 11. PERFORMANCE GUARANTEES If the Works fail to meet the performance guarantees, the Contractor pays performance liquidated damages as per Schedule 3, or repairs the Works to meet them. 12. OWNER OBLIGATIONS The Owner will provide site access, permits that are its responsibility, and payment on time. 13. INSURANCE The Contractor will maintain [contractor's all-risk, third-party liability, workmen] insurance as set out in Schedule 5. 14. LIABILITY The Contractor's total liability is capped at [N]% of the Contract Price, except for [fraud, death or injury, and other carve-outs]. Neither party is liable for indirect or consequential loss. 15. FORCE MAJEURE Neither party is liable for delay caused by events beyond its reasonable control, on the terms in clause 15. 16. TERMINATION Either party may terminate for the other's material default after notice and a cure period, or on insolvency, on the terms set out here. 17. DISPUTES AND GOVERNING LAW This Contract is governed by the laws of [jurisdiction]. Disputes are referred to [arbitration seat / courts], with [a dispute board] first where stated. Signed for the Owner: __________ Signed for the Contractor: __________ Name / title / date Name / title / date

- **Price (clause 3).** A turnkey price is a lump sum. Spell out the narrow exceptions (variations, named cost-index adjustments) so the fixed price does not quietly become open-ended.
- **Time and completion (clause 4).** Define exactly what "Completion" means, tied to the Tests on Completion, so there is no argument about whether the plant is really finished.
- **Payment and security (clauses 5 and 6).** Milestone payment, retention and a performance guarantee protect the owner. Retention is usually released in part at Taking-Over and the rest at the end of the defects period.
- **Tests and performance guarantees (clauses 7 and 11).** For plants, the output, efficiency or capacity guarantees in Schedule 3 are as important as the price. Say what happens if the plant underperforms: repair, or performance liquidated damages.
- **Delay damages (clause 10).** Set a per-day or per-week rate and a cap. In India these must be a genuine pre-estimate of loss and are read with Section 74 of the Indian Contract Act, 1872, which allows reasonable compensation up to the stated amount.
- **Liability (clause 14).** A liability cap and the exclusion of indirect loss are heavily negotiated. The owner usually insists on carve-outs for fraud, personal injury and sometimes breach of the performance guarantees. ## Common mistakes to avoid - Describing the method instead of the required output, which undercuts the single-point, fit-for-purpose nature of a turnkey contract.
- Leaving "Completion" undefined, so Taking-Over becomes a dispute.
- A delay-damages figure with no cap, or one that is a penalty rather than a genuine pre-estimate of loss.
- No performance guarantees or tests for a plant whose whole value is its output.
- A liability cap with no carve-outs the owner can live with.
- Forgetting price-adjustment limits, so a "fixed" price drifts. ## A note on jurisdiction Turnkey and EPC contracts follow similar commercial logic worldwide, but the governing law matters. In India the contract is read under the Indian Contract Act, 1872, delay and performance damages engage Section 74 (reasonable compensation, no separate penalty doctrine as in English law), and disputes are often referred to arbitration under the Arbitration and Conciliation Act, 1996. Stamp duty on the instrument varies by state. For public projects, procurement rules and model forms may apply. In the UK, Ireland, Singapore, Australia and the US, the FIDIC Silver Book is widely adapted but local construction, insolvency and security-of-payment laws differ, so treat "fit for purpose," liability caps and delay damages as points to confirm locally rather than assume one answer fits all. ## Where a contract workspace helps A template gets you a workable turnkey contract, but the real effort begins after signing: holding scope, price and completion terms steady across versions and counterparties, catching a weak liability cap or a missing performance guarantee before you commit, and keeping the tests, milestones and defects period in view as the build runs. Drafting, reviewing, tracking and governing a turnkey contract can all sit in one AI workspace tuned to how your company builds, rather than split across a drafting tool, a separate reviewer, a renewals spreadsheet and a shared drive. [Adira](https://adiralaw.com) is one tool built that way, around a single workspace rather than a stack of disconnected ones.