Construction Contract Template

This Construction Contract (the "Agreement") is entered into as of  (the "Effective Date") by and between: , with their property at  (the "Owner"); and

, with their main business at  (the "Contractor") (each referred to individually as a "Party" and together as the "Parties").

1. Party Roles and Key Defined Terms

For purposes of this Agreement, the Party commissioning or procuring the Work is the "Owner", whether acting as an owner, developer, tenant, contractor, subcontractor, or other contracting entity. The Party performing or providing the Work is the "Contractor", whether acting as a general contractor, subcontractor, or lower-tier contractor. Each includes its successors and permitted assigns. Capitalized terms used in this Agreement have the meanings given in Exhibit A (Definitions), which is incorporated by reference.

2. Scope of Work

(i) Description. The construction work and related activities described in this Agreement constitute the project (the “Project”). Contractor shall furnish all labor, materials, equipment, supervision, tools, and services necessary to perform the construction work (the "Work") in accordance with the written plans, specifications, and schedule agreed by the Parties. All such documents shall be in writing, and attached as Exhibits (as defined in the Exhibits section), or issued through Change Orders in writing signed by the Parties modifying the scope, cost, or time (each a "Change Order").

The following subsections, as completed and applicable, identify and form part of the description of the Work for purposes of this Agreement.

(a) Scope and Project Classification:  Residential  Commercial  Public Project  Remodel

 New Construction  Addition  Other: 

(b) Project Summary:



(c) Drawings and Specifications:



(d) Work Components:





(e) Utilities or Permits required:



(f) Materials or Brands specified:



(g) Exclusions in Work:





(h) Owner-Supplied Items (if any):



(i) Special Conditions or Notes:



(j) Schedule or Milestones: . The Project Schedule described in the Project Schedule Section and, if applicable, Exhibit B (Project Schedule), governs all schedule obligations and supersedes any summary provided here.

(ii) Site. The Work shall be performed at  (the "Site"). Contractor shall coordinate with other trades, protect the Work and any existing improvements from damage. The commissioning Principal Party shall, to the extent of its control, provide the Contractor with timely Site access, necessary approvals, and information required to perform the Work, and shall make all required payments and financing arrangements under this Agreement.

Site conditions or constraints (if known):



(iii) Standards. Contractor shall perform the Work in a good, workmanlike manner consistent with industry standards, applicable codes, and laws. Upon discovering any conflict or error in the plans or specifications, Contractor shall promptly notify Owner in writing before proceeding. The Work shall conform to all written plans, specifications, and Owner-approved modifications. If conflicts exist among the Contract Documents, the more stringent requirement for quality, durability, or performance, as reasonably determined by Owner, shall govern.

3. Contract Price

The total price for the Work is $, subject to adjustments for approved Change Orders.

The pricing method for the Project shall be as selected:

 Lump Sum (Fixed Price): $, including Contractor’s fee of $ (or %) for overhead and profit.

 Cost Plus with Guaranteed Maximum Price: Actual, reasonable costs of Work plus Contractor’s fee of $ (or %), not to exceed $, except as adjusted by Change Orders.

 Cost Plus (No Guaranteed Maximum Price): Actual, reasonable costs of the Work plus a Contractor’s fee of $ (or %) for overhead and profit, without a guaranteed maximum. Owner shall pay all such costs, subject to audit and review.

 Unit Price: Payment based on actual quantities of Work performed at the unit prices listed below, or in Exhibit  if attached. Quantities shall be measured and verified by both Parties in writing before payment. Adjustments to estimated quantities do not change the unit prices but may increase or decrease the total Contract Price.

• : $
• : $

 Other: As expressly agreed in writing by the Parties 

.

The price covers all labor, materials, equipment, permits, inspections, subcontractors, and other items required to complete the Work. Additional allowable costs are as follows: 

.

Any supplier or subcontractor discounts, rebates, or savings shall be credited to the Owner.

4. Payment Schedule

(i) Progress Payments. Payments shall be made as follows:

Payment 1: Upon completion of : $

Payment 2: Upon completion of : $

Payment 3: Upon completion of : $

Payment 4: Upon completion of : $

(ii) Retainage. The paying party may withhold up to 10% of each progress payment until Substantial Completion (as defined in Exhibit A: Definitions), per the payment schedule or written agreement and subject to any prompt-payment law.

(iii) Payment Timing. Unless otherwise stated, progress payments are due within  days after receipt of an approved invoice or application for payment.

(iv) Final Payment. The paying party shall pay the undisputed final balance within 30 days after Substantial Completion and acceptance of the Work, once the Contractor has met all obligations and submitted required lien waivers and closeout documents.

5. Payment Conditions and Risk

(i) Lien Waivers. Each payment is conditioned on the Contractor submitting partial lien waivers from itself and its subcontractors or suppliers for previously paid Work. Standard conditional or unconditional forms attached as Exhibits may be used for progress and final payments.

(ii) Title and Risk of Loss. Title to materials and equipment passes to the commissioning Party upon payment; risk of loss remains with the Contractor until Substantial Completion.

6. Changes in the Work

Any change to the Work, price, or schedule must be approved in writing and signed by the Parties as a Change Order. Contractor shall not perform extra or changed Work without that authorization, except in an emergency endangering life or property, in which case Contractor shall act immediately and notify Owner within 24 hours. The commissioning Principal Party shall review and approve Change Orders without unreasonable delay.

7. Project Schedule

(i) Start Date and Schedule Reference. The overall Project is scheduled to commence on or about . The anticipated schedule for major milestones, including mobilization, key trade activities, and Substantial Completion, is set forth in Exhibit B (Project Schedule), if attached. The Parties may update that schedule through a written Change Order without amending this Agreement.

If no such Exhibit is attached, Contractor shall begin the Work on or before  and achieve Substantial Completion of the Work no later than . Time is of the essence, but the Contractor shall not be liable for delays caused by factors beyond its reasonable control (such as weather, labor disputes, or Owner-requested changes).

(ii) Delays and Force Majeure. Neither Party is liable for delay from causes beyond reasonable control (including natural disasters, labor disputes, government actions, or material shortages). When such an event occurs, the schedule is equitably extended; upon its end, Contractor shall promptly resume work, and the Parties shall agree on a reasonable time extension. No extra payment is owed unless agreed in writing. Contractor shall notify Owner within 7 days of any likely delay.

8. Permits, Codes, and Safety

Contractor shall (i) obtain and maintain all permits, licenses, and inspections required to perform the Work lawfully; (ii) comply with all safety, labor, environmental, and building laws and regulations; and (iii) keep the Site safe, clean, and orderly, protecting persons and property. Contractor is responsible for any damage to the Site or adjacent property caused by its operations and shall repair it at its expense, and responsible for acts and omissions of its subcontractors and suppliers.

9. Suspension and Withholding

(i) Directed Suspension. Owner may suspend all or part of the Work by written notice stating the effective date and scope. Contractor shall secure and protect the Work during suspension. If a non-Contractor suspension exceeds 30 days, Contractor is entitled to a reasonable schedule extension and equitable adjustment for documented demobilization, remobilization, and protection costs.

(ii) Withholding of Payment. The paying party may withhold only amounts reasonably necessary for defective or incomplete Work, filed liens or claims, missing waivers or insurance, overpayments, or material breach affecting that invoice. The undisputed balance remains due on time. The paying party shall state reasons in writing within 7 days of the due date and release withheld funds within 14 days after cure or resolution, subject to any prompt-payment law or higher-tier terms.

(iii) Suspension for Nonpayment. If any undisputed amount remains unpaid 30 days after its due date, Contractor may suspend Work with 7 days’ written notice without default. After payment, Contractor shall resume within 5 days and receive a reasonable schedule extension and equitable adjustment for documented demobilization and remobilization.

(iv) Continuing Performance. Except as permitted in this Section, each Party shall continue undisputed performance, including payment of undisputed amounts and progress of undisputed Work, during any dispute or claim.

10. Warranties

(i) General Warranty. Contractor warrants the Work (including labor, materials, equipment, and workmanship) to be free of defects for 1 year from Substantial Completion, or longer if required by law or agreed in writing. Warranty on corrected Work restarts upon completion of the correction. This warranty is in addition to, and not in limitation of, any other rights or remedies provided by law or under this Agreement.

(ii) Pass-Through Warranties. Contractor shall assign to Owner all assignable manufacturer, supplier, and subcontractor warranties applicable to the Work and shall cooperate in enforcing them.

(iii) Warranty Administration. The Principal Parties may list special warranty terms or exclusions here:



.

After written notice of a covered defect, Contractor shall, at its cost, correct or replace the defective Work within a reasonable time to meet this Agreement’s standards. Owner shall give notice within 30 days of discovery; Contractor shall respond within 14 days to schedule correction.

11. Indemnification

To the fullest extent permitted by law, Contractor shall indemnify, and, upon written request, defend and hold harmless the Owner, and, if applicable, any higher-tier contracting entity designated as an additional insured, against third-party claims, damages, losses, or expenses (including reasonable attorneys’ fees) arising from the negligent acts or omissions of Contractor, its subcontractors, or those for whom it is responsible, but only to the extent caused by such negligence. This obligation does not apply to claims arising from the negligence or willful misconduct of any indemnitee and shall survive termination or completion.

12. Limitation of Liability

Except for damages arising from a Party’s gross negligence, willful misconduct, or indemnification obligations, neither Party is liable for incidental, consequential, special, or punitive damages, including lost use, revenue, or profit, arising out of this Agreement. Contractor’s total liability to the Owner and any higher-tier contracting entity designated as an additional insured shall not exceed the total amount payable hereunder, except for amounts recoverable under applicable insurance, indemnification obligations, or damages from gross negligence or willful misconduct.

13. Insurance

(i) Contractor’s Coverage. Contractor shall maintain, at its own expense, insurance sufficient to cover its obligations under this Agreement, including at minimum:

• Commercial General Liability Insurance with limits not less than $1,000,000 per occurrence and $2,000,000 aggregate. Contractor must name the Owner (and, if applicable, any higher-tier contracting entity) as additional insureds under .
• Employer’s Liability Insurance with limits not less than $500,000 per occurrence.
• Workers’ Compensation Insurance as required by law.

Contractor shall provide Owner with Certificates of Insurance evidencing the required coverage before commencing the Work.

(ii) Additional Coverage. When required by law, by the Owner or any higher-tier contracting entity, or by the nature of the Work, Contractor shall also maintain any of the following insurance coverages, as required:

• Commercial Automobile Liability Insurance: $1,000,000 per occurrence
• Required for:  Contractor,  Owner,  
• Builder’s Risk or Installation Floater Insurance: full replacement value
• Required for:  Contractor,  Owner,  
• Umbrella or Excess Liability: $1,000,000 per occurrence
• Required for:  Contractor,  Owner,  
• Pollution/Environmental Liability: $1,000,000 per occurrence
• Required for:  Contractor,  Owner,  
• Other: 
• Required for:  Contractor,  Owner,  

Clarification. Listing a non-signatory in the “Required for” field does not make that person a Party or create direct obligations; the Parties shall ensure required coverage is maintained as applicable.

(iii) Owner’s Coverage. The Principal Party with control over the Site or the ability to procure property insurance (whether the Owner, Contractor, or a higher-tier contracting entity) shall maintain property insurance covering the Work for its full replacement value against standard perils, naming the Owner and Contractor as additional insureds. If the Owner does not control the Site or lacks authority to obtain this insurance, the Parties shall coordinate to ensure that the Owner, Contractor, or higher-tier entity maintains equivalent Builder’s Risk or Property coverage.

(iv) Certificates of Insurance. Each Principal Party, and if applicable any higher-tier contracting entity required under this Agreement, shall provide the other Principal Party with Certificates of Insurance before Work begins and upon renewal, showing the required coverage and additional-insured status. Certificates shall remain current during performance and any warranty period. Upon request, either Principal Party shall provide copies of relevant policies or endorsements verifying additional-insured status.

Nothing in this Section requires either Party to carry insurance beyond what is customarily maintained for the type and scope of Work.

14. Waiver of Subrogation

To the extent permitted by applicable insurance policies, each Party waives all rights of subrogation against the other Party and its officers, employees, agents, and subcontractors for losses or claims covered, or required to be covered, by insurance under this Agreement. Each Party shall cause its insurers to include waivers of subrogation in favor of the other Party and all additional insureds where commercially available. This waiver does not affect rights with respect to uninsured losses, self-insured retentions, or deductibles.

15. Termination

(i) Either Party may terminate this Agreement if the other Party materially breaches it and fails to cure such breach within 14 days after written notice.

(ii) Either Party may suspend performance of the Work, in whole or in part, upon written notice if the other Party materially breaches this Agreement, fails to make due payments, or creates unsafe or unlawful conditions. Suspension shall not constitute termination unless the suspending Party gives written notice of intent to terminate after the cure period expires.

(iii) Either Party may terminate for its convenience upon 30 days’ written notice, subject to payment for Work performed, materials procured, and reasonable direct demobilization costs incurred as of the termination date.

(iv) Upon termination for cause by the Owner, the Owner may take possession of the Work, materials, and equipment on site and complete the Work by any lawful method after providing written notice and a reasonable accounting of all property taken. Within 10 business days after termination, the Parties shall complete a final accounting and reconcile all payments due, including Work performed, approved materials, and authorized costs.

(v) Termination does not waive any rights or remedies accrued prior to termination, and all provisions that expressly or by their nature survive termination remain in effect.

16. Governing Law and Dispute Resolution

(i) Governing Law. This Agreement is governed by the laws of the State of , excluding conflict-of-law rules. Mandatory lien, bond, and licensing laws of the Project location shall apply to the extent required by law.

(ii) Mediation and Arbitration. The Principal Parties shall first attempt in good faith to resolve any dispute, claim, or controversy arising out of or relating to this Agreement, the Work, or the Project (the “Dispute”) through direct discussion. If unresolved after 30 days, it shall proceed to mediation with a mutually agreed mediator, or, if none is chosen within 10 days, one appointed by AAA, JAMS, or a comparable local bar service.

Any Dispute not resolved through mediation shall be settled by binding arbitration administered by AAA or, if AAA is unavailable or declines to administer, by JAMS. The seat of arbitration shall be , with hearings conducted in ,  unless otherwise agreed. The arbitration award is final and binding and may be entered in any court of competent jurisdiction. Arbitration fees shall be initially shared equally but may be reallocated by the arbitrator based on the outcome.

(iii). Court Proceedings, Costs, and Remedies. Either Principal Party may file in a court of competent jurisdiction in ,  if arbitration becomes legally unavailable, impracticable, or excessively costly, or if the Principal Parties cannot agree on an arbitration provider or venue within 15 days after mediation concludes. Either Principal Party may also seek injunctive or equitable relief, or file to enforce lien, bond, or payment rights, and filing such an action does not waive arbitration for remaining issues. The prevailing Principal Party shall recover reasonable attorney, expert, and related costs unless prohibited by law.

(iv) Confidentiality and Continuing Performance. All mediation, arbitration, or settlement proceedings shall remain confidential except as required by law or to enforce an award. Pending resolution of any Dispute, the Parties shall continue performing all undisputed obligations under this Agreement. This Section survives termination or expiration of this Agreement.

17. Entire Agreement, Amendments, and Counterparts

This Agreement, including all Exhibits and Contract Documents, is the complete and exclusive statement of the Parties’ agreement and supersedes all prior or contemporaneous agreements, oral or written. It may be amended only by a written instrument signed by the Parties. This Agreement may be executed in counterparts, each deemed an original, together forming one binding instrument. Electronic or scanned signatures are valid and enforceable.

18. Exhibits

“Exhibit” means any document expressly designated as such and signed or initialed by the Parties, unless expressly stated otherwise in writing. All Exhibits are incorporated into this Agreement. In the event of any conflict between this Agreement and an Exhibit, this Agreement governs unless the Exhibit expressly states the Section it overrides and is signed by the Parties. All Exhibits listed below are optional unless expressly required by this Agreement.

Incorporated Exhibits include, as selected:

 Exhibit A: Definitions

 Exhibit B: Project Schedule

 Exhibit C: Lien Waiver and Release Forms

 Exhibit D: 

19. Miscellaneous

(i) Interpretation. Headings are for convenience only and do not affect interpretation. References to “Either Party,” “Neither Party,” or “Both Parties” mean the two principal contracting entities—the Party commissioning or procuring the Work and the Party performing or providing the Work—together with any additional named Party who has executed this Agreement, each of whom is deemed a Principal Party unless expressly stated otherwise. Individuals or entities associated with the Project who have not executed this Agreement are not Principal Parties and assume no rights or obligations under it. Words in the singular include the plural and vice versa; references to persons include entities; and references to “days” mean calendar days unless otherwise stated.

(ii) Fallback Definition. To preserve enforceability, if any defined term, such as "Principal Parties", “Owner” “Contractor”, “Work”, or "Project" is changed, replaced, renamed, or omitted in any version of this Agreement or its Exhibits, that term and all related references shall, by their plain meaning and context, continue to refer to the same respective roles, subject matter, obligations, and relationships described herein, and shall be interpreted consistently with this intent in all contexts and versions of this Agreement, so as not to expand, limit, transfer, or alter any Party’s rights, obligations, authority, or remedies under this Agreement. Specifically: (a) "Principal Parties" means the contracting entities identified in the first paragraph of this Agreement—namely, the Party commissioning or procuring the Work, and the Party performing or providing the Work. Any reference to "either Principal Party" means either of those signatories, but not any other participant. References to "Party" or "Parties" shall be construed consistently with this definition. (b) "Owner" means the Party commissioning, engaging, or otherwise procuring the Work (whether acting as an owner, developer, tenant, general contractor, subcontractor, or other contracting entity), and includes its successors and permitted assigns. (c) "Contractor" means the Party performing or providing the Work (whether acting as a general contractor, subcontractor, or lower-tier contractor), and includes its successors and permitted assigns. (c) "Work" means all construction work, labor, materials, equipment, and related services that the Contractor is required to perform under this Agreement or any incorporated Exhibit. (d) "Project" means the construction work and related activities collectively described in this Agreement, of which the Work forms a part.

(iii) Independent Contractor. Contractor acts solely as an independent contractor, not as an employee or agent of Owner.

(iv) Assignment. Neither Principal Party may assign or transfer this Agreement without the prior written consent of the other, except that either Principal Party may assign it to a successor in connection with a merger, reorganization, or sale of substantially all assets, provided the assignee assumes all obligations in writing.

(v) Severability. If any provision is held invalid or unenforceable, the remainder remains in effect.

(vi) Role Interpretation. References to "Owner" and "Contractor" are for convenience only and shall be interpreted consistent with each Party’s respective role and obligations under this Agreement and the Project. If a Party performs both commissioning and performing roles, it is deemed to act in each capacity as applicable to its obligations.

(vii) Waiver. No waiver is effective unless in writing and signed by the granting Principal Party. Delay or failure to enforce is not a waiver of future enforcement.

(viii) Survival. Provisions of this Agreement that by nature survive termination or completion, including warranties, indemnification, and liability limitations, remain enforceable.

(ix) Notices. All notices, requests, or other communications under this Agreement must be in writing and delivered by hand, recognized courier with proof of delivery, certified or registered mail with return receipt, or by email sent to the addresses most recently designated in writing by each Party. Notices are deemed effective (i) upon confirmed delivery by courier or mail, or (ii) when sent by email to the designated address, provided the sender does not receive an automated failure, bounce-back, or undeliverable notice. Any Party may change its notice address by providing written notice to the others.

(x) Signatures. By signing below, the Principal Parties acknowledge that they have read, understood, and agree to be bound by this Agreement. Electronic or scanned signatures are deemed originals and equally enforceable.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.