What is a characteristic of unit-price contracts?

Unit-price contracts are characterized by payment based on the actual quantity of work performed. This means that the contract sets a price per unit of work, and the total cost is determined by the actual amount executed during the project's course. For instance, if a contractor is paid a specified amount for each cubic yard of concrete poured, the total payment will adjust according to how many cubic yards were actually poured, making this approach flexible and directly tied to the volume of work completed.

This is particularly advantageous in construction and engineering projects where the exact quantities of work required can be difficult to predict at the outset. Such contracts allow for variations in quantities without the need for a complete renegotiation of terms, as would typically be the case with fixed-price contracts.

In contrast, fixed total amounts for a project would correspond to lump-sum contracts, which do not adjust according to actual quantities performed. The notion of being negotiated solely between two parties does not inherently relate to unit-price contracts, as they can be more broadly negotiated in various contexts. Lastly, whether a performance bond is required is a separate condition that can apply to various contract types and does not specifically define unit-price contracts.