Basic Construction Contract
Agreement made on the ________________ (date) , between _____________________
(Name of Owner) of ___________________________________________________________
___________________ (street address, city, county, state, zip code) , referred to herein as
Owner , and ______________________ (Name of Contractor) , a corporation organized and
existing under the laws of the state of _______________, with its principal office located at
____________________________________________________________________________
(street address, city, county, state, zip code) , referred to herein as Contractor .
For and in consideration of the mutual covenants contained in this agreement, and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
1. The Work
Contractor shall construct the items identified in Exhibit A attached hereto and
incorporated herein by reference, hereinafter referred to as the Work. Said Work will be
performed in accordance with the Contract Documents, as identified in Article 8 of this
Agreement on property on the property described in Exhibit B attached hereto and incorporated
herein by reference, said property referred to hereinafter as the Property.
2. Contract Time
The Work will be completed on or before _________________ (date) , hereinafter called
the Completion Date , subject to modifications in approved Change Orders. The Completion
Date shall be the date when the Work is sufficiently complete in accordance with the Contract
Documents so that Owner can occupy or utilize the Property for its intended use (Substantial
Completion). If Owner will pay Contractor for all or part of the Work with funds advanced by a
lender, Substantial Completion shall be the date as defined by the loan documents. Before
starting the Work, Contractor shall submit to Owner for review an estimated progress schedule
indicating the starting and completion dates of various stages of the Work.
3. Contract Price
Owner shall pay to Contractor an amount equal to $____________ (Contract Price) for
completion of the Work.
4. Change Orders
Any increase or decrease in the Contract Price, change in the Work or change in the
Contract Time must be set forth in a change order signed by Owner and Contractor and
approved by the Lender (Change Order).
5. Payment Procedures
A. Progress Payments. Contractor shall submit to Owner a request for payment in
a form agreed to by Owner and Contractor and approved by Lender (Request for
Advance) which shall cover a period of at least _______ calendar days. Within ______
calendar days after a Request for Advance is presented, Owner, shall notify Contractor if
Owner has any concerns about the Request for Advance that Owner believes should be
resolved before Owner pays the amounts specified in the Request for Advance, and, in
this event, Owner and Contractor shall promptly meet to address such concerns. Owner
shall pay Contractor _____ percent of the full amount covered by the Request for
Advance within _____calendar days from the day it was presented while retaining _____
percent thereof (Holdback) to be paid simultaneously with the final payment. Payment
may be withheld for: (1) failure to perform the Work in accordance with the Contract
Documents; (2) defective Work that is not corrected; or (3) failure of the Contractor to
pay subcontractors or to pay for labor, materials or equipment when due.
B. Final Payment. Final payment of the balance of the Contract Price including the
Holdback shall be made in accordance with the following procedures:
1. When Contractor considers the Work substantially complete, Contractor
shall notify Owner in writing. Within a reasonable time thereafter, Owner and
Contractor shall inspect the Work. Promptly after such inspection, Owner shall
deliver to Contractor a written punch list of the items that must be completed in
order for the Work to reach final completion (Final Completion). Alternatively,
Owner shall deliver to Contractor a written statement that Final Completion has
been reached because no punch list items remain to be completed.
2. If Owner delivers a written punch list to Contractor, then Contractor shall
deliver to Owner a written notice that the Work is finally complete when
Contractor believes that the punch list items have been completed. Owner and
Contractor shall then promptly inspect the punch list items. Promptly after such
inspection, Owner shall deliver to Contractor either (i) a written statement that
Final Completion has been reached or (ii) another written punch list of the items
that still must be completed in order for the Work to reach Final Completion in
which event the punch list procedure described above shall be repeated until all
punch list items have been completed.
3. When Final Completion has been reached and after Contractor has
delivered to Owner all maintenance and operating instructions, schedules,
guarantees, certificates of inspection, marked-up record documents and other
documents, Contractor may make application for final payment following the
procedure for progress payments. The final Request for Advance shall be
accompanied by all documentation called for in the Contract Documents,
together with complete and legally effective releases or waivers (satisfactory to
Owner and Lender) of all potential liens arising out of or filed in connection with
the Work.
6. Interest
Payments due and unpaid to Contractor shall bear interest at the rate of the lower of
_____ % per annum or the maximum rate allowed by law at the place of the Work.
7. Contractor’s Representation
In order to induce Owner to enter into this Contract, Contractor makes the following
representation:
Contractor has familiarized itself with the nature and extent of the Contract Documents,
Work site, locality, and all local conditions and laws and regulations that in any manner
may affect cost, progress, performance or furnishing of the Work. Contractor is duly
licensed to perform the Work as required by local laws and regulations.
8. Contract Documents
The Contract Documents which comprise the entire Contract between Owner and
Contractor concerning the Work consist of this Contract, Exhibit A , the Plans and
Specifications, and all Change Orders.
9. Contractor’s Responsibilities
A. Performance. Contractor shall perform the Work in accordance with the Contract
Documents. Contractor shall be solely responsible for the means, methods, techniques,
sequences and procedures of construction.
B. Personnel. Contractor shall provide competent, suitable personnel to survey and
layout the Work and perform construction as required by the Contract Documents.
Contractor shall at all times maintain good discipline and order at the Property.
C. Furnished Items. Contractor shall furnish and be fully responsible for all
materials, equipment, labor, transportation, construction equipment and machinery,
tools, appliances, fuel, power, light, heat, telephone, water sanitary facilities, temporary
facilities and all other facilities and incidentals necessary for the furnishing, performance,
testing, start-up and completion of the Work.
D. Materials. All materials and equipment shall be of good quality and new, except
as otherwise provided in the Contract Documents. All materials and equipment shall be
applied, installed, connected, erected, used, cleaned and conditioned in accordance with
the instructions of the applicable supplier.
E. Subcontractors. Contractor shall be fully responsible to Owner for all acts and
omissions of its subcontractors, suppliers and other persons and organizations
performing or furnishing any of the Work under a direct or indirect contract with
Contractor just as Contractor is responsible for Contractor's own acts and omissions.
Nothing in the Contract Documents shall create any contractual relationship between
Owner and any such subcontractor, supplier or other person or organization, nor shall it
create any obligation on the part of Owner to pay any such subcontractor, supplier or
other person or organization except as may otherwise be required by laws and
regulations.
F. Permits and Inspections. Contractor shall obtain and shall pay for all
construction permits and licenses. Owner shall assist Contractor, when necessary, in
obtaining such permits and licenses. Contractor shall pay all governmental charges and
inspection fees necessary for the prosecution of the Work. Contractor shall give all
notices and comply with all laws and regulations applicable to furnishing and
performance of the Work.
G. Taxes. Contractor shall pay all sales, consumer, use and other similar taxes
required to be paid by Contractor in accordance with the laws and regulations of the
place of the Work which are applicable during the performance of the Work.
H. Use of Premises. Contractor shall confine construction equipment, the storage
of materials and equipment and the operations of workers to the Property, and shall not
unreasonably encumber the Property with materials or equipment. Contractor shall be
fully responsible for any damage to the Property or areas contiguous thereto resulting
from the performance of the Work. During the progress of the Work, Contractor shall
keep the Property free from accumulations of waste materials, rubbish and other debris
resulting from the Work. At the completion of the Work, Contractor shall remove all
waste materials, rubbish and debris from and about the Property as well as all tools,
appliances, construction equipment and machinery, and surplus materials, and shall
leave the Property clean and ready for occupancy by Owner.
I. Record Documents. Contractor shall maintain in a safe place at the Property
one record copy of all drawings, specifications, addenda, written amendments, Change
Orders, and the like in good order and annotated to show all changes made during
construction which will be delivered to Owner.
J. Safety. Contractor shall be responsible for initiating, maintaining and supervising
all safety precautions and programs in connection with the Work. Contractor shall
comply with all applicable laws and regulations relating to the safety of persons or
property.
K. Continuing the Work. Contractor shall carry on the Work and adhere to the
progress schedule during all disputes or disagreements with Owner.
L. Damage to the Work. Contractor shall repair or replace, at Contractor's sole
expense, every portion of the Work that is damaged or destroyed prior to Final
Completion and caused in whole or in part by the acts or omissions of Contractor.
Notwithstanding the foregoing, Owner shall bear the cost of such repair or replacement if
the sole cause of the damage or destruction of the Work was Owner's negligence.
M. Warranty. Contractor warrants and guarantees to Owner that all Work will be in
accordance with the Contract Documents and will not be defective. If within one year
after the date of Final Completion or such longer period of time as may be prescribed by
laws or regulations or by the terms of any specific provision or applicable special
guarantee in the Contract Documents, any Work is found to be defective, Contractor
shall promptly, without cost to Owner and in accordance with Owner's written
instructions, promptly either correct such defective Work, or if it has been rejected by
Owner, remove it from the Property and replace it with non-defective Work. If Contractor
does not promptly comply with the terms of such instructions, or in an emergency where
delay would cause serious risk of loss or damage, Owner may have the defective Work
corrected or the rejected Work removed and replaced, and all direct, indirect and
consequential costs of such removal and replacement (including but not limited to fees
and charges of engineers, architects, attorneys and other professionals) will be paid by
Contractor.
N. Indemnity and Hold Harmless . Contractor shall indemnify and hold harmless
Owner against all loss, liability, cost expense, damage and economic detriment of any
kind whatsoever that arises out of or results from performance of the Work but only to
the extent caused in whole or in part by the acts or omissions of the Contractor.
O. Related Work at Property. Owner may perform other work at the Property which
is not part of the Work by Owner's own forces or let other direct contracts therefore.
Contractor shall afford Owner's own forces and each other contractor who is a party to
such a direct contract proper and safe access to the Property and a reasonable
opportunity for the introduction and storage of materials and equipment and the
execution of such work. Contractor shall do all cutting, fitting and patching of the Work
that may be required to make its several parts come together properly and integrate with
such other work. Contractor shall not endanger any work of others by cutting, excavating
or otherwise altering their work and will only cut or alter their work with the written
consent of Owner and the others whose work will be affected.
10. Insurance.
A. Contractor’s Insurance
Contractor shall purchase and maintain such comprehensive general liability and
other insurance as is appropriate for the Work being performed and furnished with limits
and features as follows: (limits and features) _________________________________
______________________________________________________________________
______________________________________________________________________
. Before any Work is started, Contractor shall deliver to Owner certificates (and other
evidence of insurance requested by Contractor) which Contractor is required to
purchase and maintain.
B. Owner's Insurance. Owner shall be responsible for purchasing and maintaining
Owner's liability insurance and other reasonably appropriate insurance.
11. Termination
A. Termination by Owner. If the Contractor breaches any of its obligations under
this Agreement, then Owner may give Contractor written notification identifying such
breach. If Contractor has not cured such breach within seven (7) calendar days from its
receipt of Owner's written notification or if such breach cannot be cured within such
seven (7) day period, then if Contractor either does not begin cure within such seven (7)
day period or fails to diligently . prosecute cure to completion, Owner may terminate this
Contract and take possession of the Work. Alternatively, instead of terminating the
Contract, Owner may cure the breach and deduct the cost thereof from amounts
otherwise owed to the Contractor.
B. Termination by Contractor. If the Owner breaches any of its obligations under
this Agreement, then Contractor may give Owner written notification identifying such
breach. If Owner has not cured such breach within seven (7) calendar days from its
receipt of Contractor's written notification, or if such breach cannot be cured within such
seven (7) day period, then if Owner either does not begin cure within such seven (7) day
period or fails to diligently prosecute cure to completion, Contractor may terminate this
Contract.
12. Severability
The invalidity of any portion of this Agreement will not and shall not be deemed to affect
the validity of any other provision. If any provision of this Agreement is held to be invalid, the
parties agree that the remaining provisions shall be deemed to be in full force and effect as if
they had been executed by both parties subsequent to the expungement of the invalid provision.
13. No Waiver
The failure of either party to this Agreement to insist upon the performance of any of the
terms and conditions of this Agreement, or the waiver of any breach of any of the terms and
conditions of this Agreement, shall not be construed as subsequently waiving any such terms
and conditions, but the same shall continue and remain in full force and effect as if no such
forbearance or waiver had occurred.
14. Governing Law
This Agreement shall be governed by, construed, and enforced in accordance with the
laws of the State of ______________.
15. Notices
Any notice provided for or concerning this Agreement shall be in writing and shall be
deemed sufficiently given when sent by certified or registered mail if sent to the respective
address of each party as set forth at the beginning of this Agreement.
16. Attorney’s Fees
In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party
in the action shall pay to the successful party, in addition to all the sums that either party may be
called on to pay, a reasonable sum for the successful party's attorney fees.
17. Mandatory Arbitration
Any dispute under this Agreement shall be required to be resolved by binding arbitration
of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one
arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall
arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration
Association then in force and effect.
18. Entire Agreement
This Agreement shall constitute the entire agreement between the parties and any prior
understanding or representation of any kind preceding the date of this Agreement shall not be
binding upon either party except to the extent incorporated in this Agreement.
19. Modification of Agreement
Any modification of this Agreement or additional obligation assumed by either party in
connection with this Agreement shall be binding only if placed in writing and signed by each
party or an authorized representative of each party.
20. Assignment of Rights
The rights of each party under this Agreement are personal to that party and may not be
assigned or transferred to any other person, firm, corporation, or other entity without the prior,
express, and written consent of the other party.
21. In this Agreement, any reference to a party includes that party's heirs, executors,
administrators, successors and assigns, singular includes plural and masculine includes
feminine.
WITNESS our signatures as of the day and date first above stated.
__________________________
(Name of Contractor)
________________________ By:_________________________
(P rinted name) _________________________
________________________ (P rinted name & Office in Corporation)
(Signature of Owner) _________________________
(Signature of Officer)
Attach Exhibits