A type of contract by which the customer agrees to pay a contractor the cost of labor and materials used in a job, plus a predetermined percent markup. In contrast, a fixed price contract is where the parties negotiate a lump sum price for the entire job prior to work commencing. Time and materials contracts are useful when it is not possible at the time of contracting to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence.
[Last updated in June of 2020 by the Wex Definitions Team]