Montana Cost Plus or Fixed Fee Construction Contract

CONSTRUCTION CONTRACT

THIS CONSTRUCTION CONTRACT (“Contract”), effective as of the date of the last party to sign below, is between , having an address at ("Contractor") and , having an address at ("Owner").

For valuable consideration the parties hereby agree as follows:

1. SCOPE OF WORK: Contractor shall provide all labor and materials, and perform all work necessary for the completion of the residence, structure, or improvements as described in the drawings and specifications signed by both Owner and Contractor (“Project”) and more particularly described as

Such drawings and specifications are hereby made a part of this Contract. Drawings and specifications shall contain a scale drawing showing the shape, size, and dimensions of the construction and equipment together with a description of the work to be done, materials to be used, and the equipment to be used or installed.

2. WORK SITE: The Project shall be constructed on the property of Owner located at and more particularly described as (hereafter "the Work Site").

Owner hereby authorizes Contractor to commence and complete the usual and customary excavation and grading on the Work Site as may be required in the judgment of the Contractor to complete the Project. Unless called for in the drawings or specifications, no landscaping, finish grading, filling or excavation is to be performed at the Work Site by the Contractor.

3. TIME OF COMPLETION: Contractor shall commence the work to be performed under this Contract on or before and shall substantially complete the work on or before .

Contractor shall not be liable for any delay due to circumstances beyond its control including strikes, casualty, acts of God, illness, injury, or general unavailability of materials.

4. PERMITS: Contractor shall apply for and obtain such permits and regulatory approvals as may be required by the local municipal/county government, the cost thereof shall be included as part of the Project price.

5. SOIL CONDITIONS: Contractor shall have no responsibility for the condition of the soils at the Work Site. Any excavation, filling or other work required by the Owner other than the usual and customary excavation and grading shall be agreed to in a Change Order for an amount in addition to the Contract Price. Contractor shall not be responsible for any damages suffered by Owner as a result of the soil conditions at the Work Site.

6. INSURANCE: Contractor shall maintain general liability, workers compensation and builder's risk insurance.

7. SURVEY AND TITLE: If the Project is near the Owner’s property boundary, Owner will point out property lines to the Contractor. If the Owner or Contractor has any doubt about the location of the property lines, Owner shall provide Contractor with boundary stakes through a licensed surveyor. In addition, Owner shall provide Contractor documentation that Owner has title to the Work Site and shall provide Contractor copies of any covenants, conditions, or restrictions that affect the Work Site.

8. CHANGES TO SCOPE OF WORK: Owner may make changes to the scope of the work, including changes to the drawings and specifications, from time to time during the construction of the Project. However, any such change or modification shall only be made by written "Change Order" signed by both parties. Such Change Orders shall become part of this Contract. Owner agrees to pay any increase in the cost of the Project as a result of a Change Order. In the event the cost of a Change Order is not known at the time a Change Order is executed, the Contractor shall estimate the cost thereof and Owner shall pay the actual cost whether or not it is in excess of the estimated cost.

9. CONTRACT PRICE:

{COST PLUS}

Owner agrees to pay Contractor the actual cost to Contractor of materials plus the sum of $ for performing the services set forth in the scope of the work. Contractor shall be paid as follows:

OR

{FIXED FEE}

Owner agrees to pay Contractor the sum of $ for performing the services set forth in the scope of the work. Contractor shall be paid as follows:

Contractor shall furnish Owner appropriate releases or waivers of lien for all work performed or materials provided at the time the next periodic payment shall be due.

10. PROGRESS AND FINAL PAYMENTS: (For residential projects or improvements to real property intended for residential purposes with a total cost of more than $400,000).

A. Owner shall make progress and final payments on account of the contract price to Contractor on the basis of progress and final payment requests submitted to Owner by Contractor according to the following monthly billing cycle:

Within seven (7) days after Contractor receives a periodic or final payment from an owner or a state agency, Contractor agrees to pay the subcontractor, if any, the full amount due the subcontractor in accordance with the subcontract for work performed or materials provided in accordance with that subcontract.

Within seven (7) days after a subcontractor receives a periodic or final payment from Contractor, the subcontractor shall pay another subcontractor, if any, the full amount due the subcontractor under the subcontract for work performed or materials provided in accordance with that subcontract.

B. Contractor’s request for payment will be considered approved by Owner 21 days after Owner or the person designated in the contract by Owner to receive the payment request, receives such request, unless, prior to that time, Owner provides Contractor with a written statement containing specific items in the request for payment that the Owner disapproves.

Owner may disapprove the request for payment or a portion of the request based upon a claim of:

1. Unsatisfactory job progress;

2. Failure to remedy defective construction work or materials;

3. Disputed work or materials;

4. Failure to comply with material provisions of the construction contract or accompanying documents, including but not limited to payroll certifications, lien releases, warranties, material certifications, and test data;

5. Failure of a contractor to make timely payment for claims, including but not limited to claims for labor, equipment, materials, subcontracts, taxes, fees, professional services, rent, and royalties;

6. Damage to the owner; or

7. The existence of reasonable evidence that the construction contract cannot be completed for the unpaid balance of the contract sum.

Owner may withhold from a payment only an amount that is sufficient to pay the direct expenses that Owner may reasonably expect will be necessary to correct any claim based on the items set out above. Owner will furnish a written statement to Contractor specifying a condition listed above for which approval of the request for payment or a portion of the request for payment is being withheld. If Owner approves all or a portion of Contractor’s request for payment, Owner shall pay Contractor the approved amount within seven (7) days after Contractor’s request for payment is approved.

Prior to submitting a monthly or final pay application to Owner, Contractor may disapprove a subcontractor’s request for payment or a portion of the request based upon a written claim of any of the above listed conditions.

C. Final payment shall not be made or deemed due until Contractor has delivered to Owner a complete release of all liens arising out of the contract, or receipts in full covering all labor, materials, and equipment for which a lien could be filed, or in the alternative a bond satisfactory to Owner indemnifying him or her against any and all such liens.

D. Owner, by making final payment, waives all claims except those arising out of the following

1. Faulty work appearing after substantial completion has been granted;

2. Work that does not comply with the contract documents;

3. Outstanding claims of lien; or

4. Failure of Contractor to comply with any special guarantees required by the contract documents.

E. Contractor, by accepting final payment, waives all claims except those that Contractor has previously made in writing, and which remain unsettled at the time of acceptance.

11. LATE PAYMENT/DEFAULT: (For residential projects or improvements to real property intended for residential purposes with a total cost of less than $400,000).

A failure to make payment for a period in excess of ten (10) days from the due date shall be deemed a material breach of this Contract. If payment is not made when due, Contractor may suspend work on the job until such time as all payments due have been made without breach of the Contract pending payment or resolution of any dispute. Owner agrees to pay a late charge of 1% of all payments that are more than ten (10) days late plus interest at the rate of 1% per month.

(For residential projects or improvements to real property intended for residential purposes with a total cost of more than $400,000).

A failure to make payment for a period in excess of 30 days from the due date shall be deemed a material breach of this Contract. If payment is not made when due, Contractor may suspend work on the job until such time as all payments due have been made, and the contractor may terminate the construction contract on seven (7) days written notice if the payment obligations are not satisfied within 30 days of suspension without breach of the Contract pending payment or resolution of any dispute. Owner agrees to pay Contractor interest, beginning on the day following the date when the payment is due, of 1 ½% a month or a pro rata fraction of that amount on the unpaid balance. If Contractor receives interest from Owner for a delayed payment by Owner, Contractor shall ensure that any interest accrued on a delayed payment is distributed by Contractor to subcontractors on a pro rata basis.

If a periodic or final payment required by a subcontract to be paid by Contractor to a subcontractor is delayed for more than 30 days plus three (3) working days from the date the payment is required by the subcontract to be made, Contractor shall pay to the subcontractor interest beginning on the day following the date when the payment is due, at the rate of 1 ½ % a month or a pro rata fraction of that amount on the unpaid balance. If a subcontractor receives interest from the contractor for a delayed payment by Contractor, the subcontractor shall ensure that any interest accrued on the delayed payment is distributed by the subcontractor to other subcontractors, if any, on a pro rata basis.

If Owner fails to make timely payments of amounts approved for a subcontractor’s work and/or Contractor fails to pay subcontractor for the approved work, or if Owner declines to approve portions of Contractor’s payment request for a subcontractor’s work and the reasons for Owner’s refusal to approve are not the fault of or directly related to the subcontractor’s work, a subcontractor may suspend work on the job until such time as all payments due have been made, and the subcontractor may terminate the construction contract if the payment obligations are not satisfied within 30 days of suspension without breach of the Contract pending payment or resolution of any dispute. A subcontractor shall provide written notice to Contractor and Owner at least seven (7) calendar days before the subcontractor’s intended suspension of performance or contract termination.

Interest is not required to be paid unless Owner, Contractor, or subcontractor, as appropriate, has been notified of these requirements at the time the request for payment is made. Acceptance of progress payments or final payment releases any claim for interest on the payment.

12. DESTRUCTION AND DAMAGE: If the Project is destroyed or damaged for any reason, except where such destruction or damage was caused by the sole negligence of the Contractor or its subcontractors, Owner shall pay Contractor for any additional work done by Contractor in rebuilding or restoring the Project to its condition prior to such destruction or damage. If the estimated cost of replacing work already accomplished by Contractor exceeds 20 percent of the Contract price, either the Contractor or Owner may terminate this Contract. Upon termination by either party, Contractor shall be excused from further performance under this Contract and Owner shall pay Contractor a percentage of the Contract price in proportion to the amount of work accomplished prior to the destruction or damage.

13. ASSIGNMENT: Neither party may assign this Contract, or payments due under the Contract, without the other party’s written consent. Any such assignment shall be void and of no effect.

14. INTERPRETATION:

(a) Interpretation of Documents. The Contract, drawings, and specifications are intended to supplement one another. In the event of a conflict, the specifications shall control the drawings, and the Contract shall control both. If work is displayed on the drawings but not called for in the specifications, or if the work is called for in the specifications but not displayed on the drawings, Contractor shall be required to perform the work as though it were called for and displayed in both documents.

(b) Entire Agreement. This Contract constitutes the entire agreement of the parties. No other agreements, oral or written, pertaining to the work to be performed under this Contract exists between the parties. This Contract may only be modified only by a written agreement signed by both parties.

(c) Governing Law. This Contract shall be interpreted and governed in accordance with the laws of the State of Montana.

15. ATTORNEYS’ FEES AND COSTS: If any party to this Contract brings a cause of action against the other party arising from or relating to this Contract, the prevailing party in such proceeding shall be entitled to recover reasonable attorney fees and court costs.

16. PERFORMANCE:

(a) Contractor may, at its discretion, engage licensed subcontractors to perform work pursuant this Contract provided Contractor shall remain fully responsible for the proper completion of the Project.

(b) All work shall be completed in a workman-like manner and in compliance with all building codes and applicable laws. To the extent required by law, all work shall be performed by individuals duly licensed and authorized by law to perform said work.

(c) Contractor agrees to remove all debris and leave the premises in broom clean condition.

17. WARRANTY: Contractor's warranty shall be limited to defects in workmanship within the scope of work performed by Contractor and which arise and become known within one (1) year from the date hereof. All said defects arising after one (1) year and defects in material are not warranted by Contractor. Contractor hereby assigns to Owner all warranties on materials as provided by the manufacturer of such materials.

* Optional provisions required only for retail installment contracts:

Notice to the Buyer.

Do not sign this contract before you read it or if it contains any blank spaces. You are entitled to an exact copy of the contract you sign. Under the law, you have the right to pay off in advance the full amount due and to obtain a partial refund of the finance charge.

I, the Buyer, have received a completed copy of the contract.

Buyer's Signature

Buyer's Residence

Date of Acknowledgement of Receipt

The cash price of the goods and services which are the subject matter of the sale is .

Collateral has been given as security for payment and is described as : .

The amount of the buyer's down payment is $.

This includes an allowance given by the contractor of $.

The amounts paid in money is $.

The amount paid in goods, described as , is $.

The unpaid cash balance is $.

Insurance Premium Payments (if applicable):

a. Type of insurance: Term of insurance: Premium paid: $ To be procured by: Buyer Contractor

b. Type of insurance: Term of insurance: Premium paid: $ To be procured by: Buyer Contractor

The amount of official fees, if any, is $.

The principal amount financed is $.

The amount of the finance charge is $.

The time balance, which is the sum of the principal amount financed and finance charge, payable by the buyer to the contractor is $.

The number of installments required is .

The amount of each installment is $.

The due date or period of each installment is .

The time sale price, which is the total of the cash price of the goods and services or services, the finance charge, and the amounts, if any, included for insurance premiums and official fees, is $.