In general, the larger the job, the longer the contract you should use. A short proposal that clearly describes the work and price might be OK for a small repair job but not for large, complicated jobs like additions, large remodels, kitchens and baths, and new homes.
The larger the job, the more money is involved and the more can go wrong. The most common areas of disagreement are the Scope of Work, Changes, and Payment — what exactly are you getting (and what is excluded) in terms of materials, work, and workmanship and for what price.
Many disputes arise from assumptions that the Owner or Contractor just “took for granted.” A good contract prevents problems by anticipating this type of misunderstanding and clearly communicating the expectations and responsibilities of both parties. It’s also a guide to resolving small disputes before they grow into large ones — always the best approach.
This construction agreement covers most of the key issues found in full-length industry-standard contracts, but in simpler language and with less legal complexity. It was drafted exclusively for users of BuildingAdvisor.com™ by construction attorney Gary Ransone, J.D.
This contract was written for use by homeowners hiring a general contractor. Please read this important disclaimer before using this contract. For further information on construction forms and contracts, visit Gary Ransone’s Contractor’s Legal Kit.
MODEL CONSTRUCTION AGREEMENT
1. PARTIES: This contract (hereinafter referred to as “Agreement”) is made
and entered into on this ______ day of _________ , 20___, by and between
___________________________________ , hereinafter called “ Owner”; and ___________________________________ , hereinafter called “Contractor”.
Contractor’s business is a: ___Corporation ___Partnership ___ Sole Proprietorship
Contractor’s State License #: _________________________________________
Contractor’s Address: _______________________________________________
Contractor’s Phone: _________________________________________________
Contractor’s Fax: ___________________________________________________
Contractor’s Email: __________________________________________________
The project is located at: ______________________________________________
Owner’s Lender (if applicable): _________________________________________
Owner is funding the project without a lender: ___ Yes ___ No
In consideration of the mutual promises and conditions contained herein,
the parties agree as follows:
2. OWNER’S REPRESENTATIVE: The Owner’s Representative is
Contractor must coordinate all of its activities, construction, scheduling, and coordination with other Subcontractors, and administrative paperwork on this project in a manner consistent with the terms of this Agreement and in a manner agreeable to the Owner’s Representative. In many cases, the Owner’s Representative may be the Owner.
3. CONTRACT DOCUMENTS: The following documents are incorporated by
reference into this Agreement and hereby made contract documents.
A. This Agreement.
B. Plans: Drawn by: __________________________; dated_________; ____ pages.
C. Written description of work attached to this Agreement, if applicable.
E. OWNER-SUPPLIED MATERIALS: Owner will furnish the following materials
at Owner’s sole expense for the project and these owner furnished items will not be
marked up or warrantied by Contractor: __________________________________
F. ALLOWANCES: Allowances for the project that are included in the
Lump Sum contract price include the following: _____________________________
Payment for work designated in the Agreement as ALLOWANCE work has been initially factored into the Lump Sum Price and Payment Schedule set forth in this Agreement. If the final amount of the ALLOWANCE work exceeds the line item ALLOWANCE amount in the Agreement, the difference between the final amount and the line item ALLOWANCE amount stated in the Agreement will be treated as Additional Work and is subject to Contractor’s profit and overhead at the rate of ____%.
If the final amount of the ALLOWANCE work is less than the ALLOWANCE line item amount listed in the Agreement, a credit will be issued to Owner after all billings related to this particular line item ALLOWANCE work have been received by Contractor. The credit will also include the contractor’s mark up on the amount of the Allowance overage. This credit will be applied toward the contractor’s next invoice on the project. The contractor and the owner shall both document the cost of all Allowance items with receipts and invoices.
SCOPE OF WORK: Contractor will furnish all labor, equipment, tools, dust barriers, materials, scaffolding, transportation, items required for safe operations in accordance with the safety provisions in this Agreement, and supervision to complete, in a substantial and workmanlike manner, to the satisfaction of the Owner and/or its Representative, the following work in accordance with all applicable Building Codes and also in accordance with all the Contract Documents specified in this Agreement. All products and materials shall be installed according to manufacturer’s written instructions and construction industry standards
A. See Scope of Work described above.
B. Scope of work is attached to this Agreement. Yes___; No____.
If attached, both parties to initial the Scope of work attachment.
C. Additional clarifications to Scope of Work or Project:
i. The following work (LABOR AND MATERIALS) is excluded from this Agreement:
ii. The following MATERIALS ONLY are excluded this Agreement *:
*Contractor’s labor costs to install the excluded MATERIALS noted in the
section immediately above, however, are INCLUDED in this Agreement.
5. LUMP SUM CONTRACT AMOUNT AND PAYMENT SCHEDULE: Owner will
pay Contractor the total lump sum of: $___________ (___________________Dollars).
INSTALLMENTS AS WORK PROGRESSES according to the following schedule:
A. Contract Deposit: Not to exceed 10% of contract amount or
$1,000, whichever is LESS: $________
B. Second Payment:_________________________________________________
C. Third Payment:___________________________________________________
D. Fourth Payment____________________________________________________
E. Final Payment is due upon completion of all work under this Agreement (including all
punch-list work), inspection and approval of work by building department (if applicable),
and Contractor furnishing the following to Owner’s Representative:
i) all product warranties, manufacturer’s maintenance instructions and information to Owner
ii) a lien release upon final payment to Contractor, who also agrees to furnish Owner’s
Representative with a Lien Release for all Subcontractor, lower-tier Subcontractors
and material suppliers that have lien rights against the project.
See Owner’s Representative for approved Release forms and frequency of Submittal of
statutory lien releases.
6. WORK COMMENCEMENT AND COMPLETION TIME: Work shall commence ____________________ and shall take approximately ____ weeks to complete. TIME IS OF THE ESSENCE in all aspects of Contractor’s performance. Contractor shall commence its work immediately after notification by Owner’s Representative and shall diligently prosecute its work to completion in a substantial and workmanlike manner in accordance with the contract documents described herein.
Approximate number of days to complete rough work: ________
Approximate number of days to complete finish: ________
Approximate number of days to complete punch list: ________
7. CHANGES IN WORK: Owner reserves the right to make changes in the Scope of Work (increases and decreases of any kind) and alterations in material and product selections. Contractor and Subcontractors shall make no changes in the work without issuance of a written change order that is first executed by both Contractor and Owner’s Representative. Owner will not pay for verbal change orders.
Contractor must obtain written change orders or, at minimum, email authorization of additional fixed-price change order work BEFORE proceeding with any additional work or any variations in specified materials. Contractor shall mark up additional work _____% for profit and overhead. Additionally, owner shall be credited contractor’s profit and overhead at the same rate as noted in the sentence above, on all deductive change orders and on work deleted from the contract by owner.
8. CONFLICT OF DOCUMENTS: The work shall be constructed in accordance with
the contract documents. In case of a conflict between any plans or other proposals
submitted by Contractor, this contract shall control and supersede all other documents.
The burden is on the Contractor and all Subcontractors to completely familiarize
themselves with the existing site conditions and all contract documents, plans,
specifications, reports, addenda, etc.,PRIOR to signing this Agreement.
If there is a conflict between the drawings and written specifications or other written
descriptions of the work, then the written specifications or descriptions will prevail.
9. INDEPENDENT CONTRACTOR: Contractor warrants that he is fully experienced, properly licensed and properly qualified as an expert to perform the work described in this agreement. Contractor shall finance its own operations and affirms that it is and shall at all times be an Independent Contractor on this project and not an agent, employee or servant of the Owner.
10. INSPECTION AND CORRECTION OF WORK: The work shall at all times be subject to the inspection of the Owner and the Owner’s Representative. In the event that at any time a portion of the work is reasonably determined by the Owner or the Owner’s Representative to be improper, defective, or of substandard quality, Contractor shall immediately, upon being notified by Owner’s Representative to do so, proceed to remove, dispose of and correct the work solely at Contractor’s own cost and expense.
11. PROTECTION OF THE WORK: The Contractor shall at all times continuously maintain adequate protection of all his work in progress and the existing building and site from all types of damage.
12. BACK CHARGES AND SET-OFFS: Owner has the express right to deduct from any payments due to Contractor the cost of repairing damage or defective work caused by Contractor or any of his Subcontractors or material suppliers if Contractor fails to correct this damage (or take significant steps towards repairing this damage) within 72 hours of receiving written notice of damage from Owner’s Representative.
13. INDEMNIFICATION: All work performed by the Contractor pursuant to any aspect of this agreement shall be done so at the sole risk of Contractor. Contractor (and his Agents), Contractor’s Subcontractors (and their Agents and lower-tier Subcontractors) and Subcontractor’s material suppliers (and their Agents) shall at all times indemnify, protect, defend and hold harmless Owner and any Owner’s Representative named in this Agreement from all loss and damage and against all law suits, arbitrations, actions, legal or administrative proceedings, claims, debts, demands, awards, fines, judgments, damages, consequential damages, liabilities, interest, attorney’s fees, costs, and expenses of any kind or nature whatsoever whether they may arise before, after or during the completion of Contractor’s work under this agreement, which are in any manner directlyor indirectly caused or contributed to in whole or in part, or claimed to be caused in whole or in part through any act, omission, fault or negligence whether active or passive of Contractor, or anyone acting under his direction, control, or on his behalf in connection with or incidental to the work under this Agreement.
14. INSURANCE: Before commencing work on the project, Contractor and its Subcontractors of every tier shall procure at their own expense, and supply to Owner’s Representative, duly issued certificates of insurance in occurrence for the following insurances:
A. Comprehensive General Liability in occurrence form with limits of not less than
$1,000,000 per occurrence (including coverage for: products, complete operations,
contractual liability, and broad form property damage).
B. Automobile liability in comprehensive form with coverage of owned, hired, and
non-owned automobiles, with limits not less than $500,000 per occurrence for
bodily injury and property damage.
C. Workers’ Compensation Insurance in statutory form.
All insurances (except worker’s compensation) shall name Owner as additional insured, and show in force for as long as may be required to protect the Owner.
All insurance certificates shall contain the following cancellation clause: “Should any of the above described policies be canceled before the expiration date thereof, the issuing company shall mail 30 days prior written notice to certificate holders.”
In the event of any damages of any kind caused by any Contractor or any Subcontractors, the Contractor’s and Subcontractor’s insurance shall operate as the primary insurance and no other insurance of the Owner shall be called on to contribute to a loss related to this project.
15. SAFETY MEASURES: It is the sole responsibility of the Contractor to continually operate, monitor and supervise all of its operations in a manner that meets or exceeds all statutes and regulations that establish safety requirements as established by state law. In addition, all of Contractor’s activities (whether labor or materials) shall at all times comply with all OSHA standards and regulations and all applicable governmental laws and orders governing safe operations.
Contractor shall erect, install and maintain all pedestrian traffic areas, warning signs, barricades, first aid kits, and other protective means as may be necessary for the protection of all persons and work in progress on the site from injury.
Finally, by signing this agreement, Contractor knowingly and willingly accepts and assumes full responsibility for the safe operation of all of its activities and the activities of all its Subcontractors of every tier and the protection of other persons and property during the entire course of this project.
16. CLEANUP: On a DAILY BASIS, and at his own expense, Contractor will clean up its work areas and keep them in a safe and sanitary condition on a daily basis. On a regular basis, Contractor will remove all of its debris from the site.
17. EXPRESS WARRANTY: Contractor unconditionally guarantees that all material
supplied by Contractor will be new and of good quality (unless any used materials
are specified in this Agreement), and that all work performed by Contractor will be
performed in a substantial and workmanlike manner. Contractor shall not substitute
materials called for by the contract documents without the written approval of the
Owner or Owner’s Representative. Contractor unconditionally guarantees it will, at
its own expense, at the request of Owner or Owner’s Representative, promptly replace or repair any work, equipment, or materials that fail to function properly for a period of no less than twelve months following the issuance of the final building department approval of the project. Contractor will also repair any surrounding parts of the structure (and/or personal property) that are damaged due to any failure in Contractor’s work for the period of twelve months following the issuance of the final building department approval. This express warranty is in addition to any implied warranties under state or federal laws. Contractor provides no warranty on any Owner-supplied materials, fixtures, appliances, etc.
18. TERMINATION FOR CAUSE / CONTRACTOR DEFAULT: If Contractor fails to commence or prosecute the work hereunder promptly and diligently at all times, or, in the opinion of the Owner’s Representative falls significantly behind schedule, or Contractor fails in any way to perform the conditions contained within this Agreement, or any of the conditions relating to Contractors contained in this agreement, or repeatedly fails to follow the instructions of the Owner’s Representative, Contractor may be terminated for default by Owner or Owner’s Representative after being given 48 hours’ notice by Owner’s Representative if Contractor fails to take significant steps to cure his default. Owner agrees to make payments to Contractor in accordance with the terms of this Agreement as long as Contractor is not in default under this Agreement.
19. LAWS AND REGULATIONS: Contractor, its employees and representatives
and Subcontractors of every tier, shall at all times comply with any applicable laws,
ordinances, rules and regulations, whether Federal, State or Municipal, particularly
those relating to wages, prevailing wages, hours, working conditions, safety, all
applicable Building Codes, and the payment of all taxes of any kind. Contractor is
responsible for obtaining all required governmental permits for the work unless
otherwise agreed to herein.
20. DISPUTE RESOLUTION: ARBITRATION OF DISPUTES & ATTORNEY’S FEES
Any dispute over the dollar limit of the Small Claims Court arising out of this Agreement that is not settled by informal attempts to resolve shall be settled by binding arbitration. If the parties are not able to informally resolve disputes arising from this Agreement, an experienced private construction arbitrator shall be mutually selected by the parties to conduct a binding arbitration in accordance with state law, including, but not limited to the right of limited discovery. The arbitrator shall also be a licensed attorney or retired judge who is familiar with construction law. If the parties are unable to mutually agree on arbitrator within 30 days of written demand for arbitration by one of the parties, then either of the parties may submit the dispute to the American Arbitration Association for binding arbitration according to the Construction Industry Rules of the American Arbitration Association and the AAA shall administer the binding arbitration.
Judgment upon the award may be entered in any Court having jurisdiction thereof. The arbitrator’s award shall be detailed and set forth both the legal and factual basis of the award.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION DECIDED BY NEUTRAL AND BINDING ARBITRATION AS PROVIDED BY STATE LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR A JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL,UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” SECTION ABOVE. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE BUSINESS AND PROFESSIONS CODE OR OTHER APPLICABLE LAWS. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
I, (WE) HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL AND BINDING ARBITRATION.
_____________________ _____________________ _____________________
OWNER OWNER CONTRACTOR
21. ENTIRE AGREEMENT, MODIFICATION, SEVERABILITY: This Agreement
represents the entire agreement and legal understanding of the parties. It shall be
deemed to have been drafted by both parties to this Agreement.
22. REVIEW OF AGREEMENT BY INDEPENDENT COUNSEL: Both parties to this
Agreement have been strongly advised to have this Agreement reviewed by their
own attorney prior to signing it. Both parties to this Agreement have either had this
Agreement reviewed by their own attorney prior to signing it or have knowingly and
willingly waived their right to do so and agree to be bound by the terms of this Agreement.