If a contract is negotiated based on price per square foot, what is this type of contract called?

When a contract is negotiated based on price per square foot, it is referred to as a unit price contract. This type of contract is particularly common in construction and real estate transactions where the pricing is determined by measurable units, which in this case is the square footage of the property.

In a unit price contract, the buyer and seller agree on a fixed price for a specific unit of measure—in this scenario, the area of the building or land being discussed. This allows for a clear understanding of costs based on the dimensions of the project, making it easier to estimate total costs based on the anticipated size of the construction or renovation.

This contract format becomes beneficial when the exact scope of work may vary, allowing for adjustments based on the actual measurements taken or the final square footage completed. Thus, it provides flexibility and clarity, which can be advantageous for both builders and buyers.

The other contract types mentioned are distinct in their approach. A fixed contract typically involves a set price for the total project, regardless of changes in project scope. A time and materials contract charges for the actual time spent and materials used, rather than a per-unit pricing structure. A cost-plus contract involves reimbursing the builder for expenses plus an additional fee, which does not directly relate to pricing