Time and Materials Contract Law and Legal Definition

Time and materials contract is a type of construction contract. Time and materials contract is an arrangement in which a contractor is paid on the basis of actual cost of direct labor, usually at specified hourly rates. The contract is paid on the basis of actual cost of materials and equipment usage and also on the basis of overheads or profits. These contracts do not necessarily have a maximum price or it may state a price not to exceed a dollar amount.