Construction Contract Template

This Construction Contract (the "Agreement") is entered into as of  (the "Effective Date") by and between:

 (the "Owner"), with their property located at ; and  (the "Contractor"), with its main business at .

Owner and the Contractor may each be referred to individually as a "Party" and together as the "Parties".

1. Purpose

The purpose of this Agreement is to set out the terms and conditions under which Contractor will perform construction services for Owner at the address described in the Scope of Work. The Parties intend for this Agreement to govern their respective rights, responsibilities, and obligations in completing the Project.

2. Scope of Work

(i) Work Scope. Contractor shall furnish all labor, materials, equipment, supervision, and services necessary to complete the construction work (the "Work") at  (the "Project"). The Work shall be performed in a good and workmanlike manner, in compliance with applicable laws, codes, and regulations, and Contractor shall keep the site reasonably clean and safe. Materials and equipment shall be as specified in this Agreement; any substitutions must receive prior written approval from Owner.

The Work may include the following (select as applicable):

 Construction of new improvements: 



 Remodeling or renovation of existing structures: 



 Installation of systems and finishes: 



If required, the Work may also include related site preparation, grading, landscaping, paving, or utility connections.

(ii) Excluded Work. Work under this Agreement excludes design or engineering, hazardous material testing or removal, and furniture, fixtures, or equipment not listed in the Scope of Work. Contractor is not responsible for utility fees, permits, or hidden site conditions unless expressly agreed in writing by the Parties.

3. Contractor’s Responsibilities

Contractor shall perform the Work in a good and workmanlike manner, in compliance with all applicable laws, codes, and regulations. Contractor shall obtain and maintain required licenses and permits, keep the site reasonably safe and clean, and cooperate with Owner and any other contractors or professionals engaged on the Project.

4. Owner’s Responsibilities

Owner shall provide timely access to the site, supply necessary information, approvals, and decisions, and make payments as required under this Agreement. Owner shall also obtain any financing needed for the Project.

5. Subcontractors

Contractor may engage subcontractors to perform portions of the work, provided Contractor remains responsible for the performance of the entire Project and ensures that all subcontractors are properly licensed and insured.

6. Project Schedule

The Project shall begin on or about  and shall be substantially completed by , subject to delays beyond Contractor’s control (such as weather, labor disputes, or Owner-requested changes). Time is of the essence, but Contractor shall not be liable for delays caused by factors beyond its reasonable control.

7. Price and Costs

(i) Project Cost. The cost to Owner for the Project shall be determined as follows (check one):

 Lump Sum: A fixed price of $, which includes Contractor’s fee of $ (or %) for overhead and profit.

 Cost Plus with Guaranteed Maximum Price: Actual, reasonable costs of the Work plus a Contractor’s fee of $ (or %), which covers overhead and profit, provided that the total amount payable by Owner shall not exceed $ (the "Guaranteed Maximum Price"), except as adjusted for approved changes.

The Project cost includes labor, materials, equipment, permits, inspections, subcontractors, and other necessary costs to complete the Work. Additional allowable costs include: 

.

(ii) Discounts. Any discounts, rebates, or savings received by Contractor from suppliers or subcontractors for Project materials or services shall be credited to Owner.

(iii) Cost Plus Pricing Option. If the Parties select cost-plus pricing, the "Cost of the Work" shall include only actual, reasonable, and necessary expenses directly related to the Project, such as labor, materials, equipment, subcontractors, permits, insurance, and other out-of-pocket costs approved by Owner.

9. Payments

(i) Progress Payments. Contractor may submit applications for payment no more than once each month (or at agreed milestones). Each application shall show the portion of the Work completed to date, less amounts previously paid and any retainage of %. Owner shall make each payment within  days after receiving the application, except for amounts properly disputed.

(ii) Records and Disputes. Contractor shall keep accurate cost records, which Owner may inspect on reasonable notice. Records must be kept for one (1) year after final payment. If Owner disputes a payment item, Owner shall give written notice with reasons, pay the undisputed portion when due, and the Parties shall work in good faith to resolve the balance.

(iii) Final Payment. Owner may withhold % retainage from progress payments. At Substantial Completion, the Parties shall identify any minor items to be finished or corrected, which Contractor shall complete within a reasonable time. Final payment, including release of retainage, is due once those items are complete and final lien waivers are delivered. Warranties begin at Substantial Completion, unless otherwise agreed.

10. Changes in the Project

Any changes to the Project must be agreed upon in writing by both Parties in the form of a change order. Each change order shall specify the change in scope, cost, and/or time of completion.

11. Warranties

1. Contractor’s Warranty. Contractor warrants that the Work will be performed in a good and workmanlike manner, free of defects, and in compliance with applicable codes and approved plans. All materials, equipment, and fixtures shall be new and of good quality unless otherwise agreed in writing. Contractor shall, at its expense, correct any defects in labor or materials that appear within one (1) year after Substantial Completion, except those caused by Owner’s misuse, neglect, or lack of maintenance.
2. Manufacturer’s Warranties. Contractor shall assign to Owner all transferable manufacturer and supplier warranties for Project materials, equipment, and fixtures.
3. Limitations. Contractor’s warranties exclude normal wear, lack of maintenance, unauthorized changes, and damage beyond Contractor’s control, including natural disasters or misuse.
4. Owner’s Warranty. Owner warrants it has the legal right to enter this Agreement, has provided accurate site information, and will not conceal material facts affecting the Work.

12. Insurance and Waiver of Subrogation

1. Contractor’s Insurance. Contractor shall maintain, at its own expense, customary insurance for commercial construction projects, including: commercial general liability (minimum $1,000,000 per occurrence / $2,000,000 aggregate), workers’ compensation (statutory limits), employer’s liability (minimum $500,000), automobile liability ($1,000,000 combined single limit), and builder’s risk (if required by Owner or law). Certificates of insurance shall be provided to Owner before Work begins.
2. Owner’s Insurance. Owner shall maintain, at its own expense, property insurance covering existing structures and business property, builder’s risk (if not carried by Contractor), and general liability sufficient to cover risks at the Project site not otherwise covered by Contractor’s insurance. Certificates shall be provided to Contractor upon request.
3. Waiver of Subrogation. To the extent permitted by their respective insurance policies, each Party waives any right of subrogation against the other Party for losses covered by insurance.

13. Termination

Either Party may terminate this Agreement for cause if the other Party materially fails to perform and does not cure within  days after written notice. The Owner may also terminate for convenience by giving  days’ written notice; in that case, Contractor shall be paid for Work performed to date and reasonable demobilization costs, but not lost profits. Contractor may terminate if Owner fails to pay when due or otherwise materially hinders performance.

14. Indemnity and Limitation of Liability

Contractor shall indemnify and hold Owner harmless from claims, damages, or losses arising from Contractor’s negligent acts or omissions, and Owner shall indemnify Contractor for claims arising from Owner’s negligent acts or omissions. Neither Party shall be liable to the other for indirect or consequential damages. This limitation does not apply to insurance coverage, third-party claims, or damages caused by willful misconduct or gross negligence.

15. Dispute Resolution and Governing Law

This Agreement is governed by the State laws of  without regard to conflict-of-law rules. Any dispute shall first be addressed through good faith negotiation. If unresolved within 30 days of written notice, the Parties shall mediate with a mutually agreed mediator, sharing the costs equally. If mediation fails, either Party may bring suit in a court of competent jurisdiction located in the State of  in  County. The prevailing Party shall be entitled to recover reasonable attorneys’ fees and costs. Nothing in this Section prevents either Party from seeking immediate injunctive or equitable relief to prevent irreparable harm.

16. Entire Agreement, Amendments, and Counterparts

This Agreement, including all exhibits and attachments, is the complete and final understanding between the Parties and replaces all prior agreements on the same subject. It may be amended only by a written document signed by both Parties, either as one signed copy or exchanged electronically. This Agreement may be executed in counterparts, each treated as an original, together forming one instrument. Electronic signatures have the same effect as originals.

17. Severability, Waiver, and Survival

If any part of this Agreement is found invalid or unenforceable, it will be limited or removed as necessary, and the rest will remain in effect. Failure to enforce any provision does not waive it, and a past waiver does not create a future waiver. Provisions that by their nature extend beyond termination, including confidentiality, intellectual property, non-compete, non-solicitation, and dispute resolution, shall survive termination to the extent permitted by law.

18. Force Majeure

Neither Party is liable for delays or failures (except payment) caused by events beyond its reasonable control, including, but not limited to, acts of God, natural disasters, epidemics, government orders or restrictions, labor disputes, power outages, supply chain interruptions, or other unforeseen circumstances ("Unforeseen Events"). The affected Party shall promptly notify the other and use reasonable efforts to resume performance. If such Unforeseen Events last more than thirty (30) days, either Party may terminate this Agreement by written notice without penalty.

19. Independent Parties and Assignment

This Agreement does not create a partnership, joint venture, or agency relationship; each Party acts independently. Neither Party may assign this Agreement without the other’s written consent, except in a merger, acquisition, or sale of substantially all assets, provided the successor agrees in writing to be bound. Any unauthorized assignment is void.

20. Notices

Notices shall be deemed given when sent by (i) certified or registered mail, (ii) recognized courier with proof of delivery, or (iii) email with confirmation and no bounce-back. Either Party may update its notice details by written notice to the other.

All notices to Owner in connection with this Agreement shall be sent to:

Name: 

Address: 

Phone:  Email: 

Attn: 

All notices to Contractor in connection with this Agreement shall be sent to:

Name: 

Address: 

Phone:  Email: 

Attn: 

21. Exhibits and Attachments

Exhibits referenced and attached are part of this Agreement. If terms conflict, this Agreement controls unless the Exhibit expressly states otherwise and is signed by both Parties. Exhibits may be updated only by a written agreement signed by both Parties.

• Exhibit A: 
• Exhibit B: 
• Exhibit C: 

22. Definitions

• "Agreement" means this Construction Contract and any amendments or signed change orders.
• "Owner" means , the person or entity hiring Contractor.
• "Contractor" means , the person or entity performing the work.
• "Project" means the construction work described in the Scope of Work to be performed at .
• "Work" means all labor, materials, equipment, and services Contractor must provide.
• "Substantial Completion" means when the Project is complete enough for Owner to use for its intended purpose, despite minor unfinished items.
• "Change Order" means a written agreement signed by both Parties modifying the scope, cost, or time. "Guaranteed Maximum Price" means the maximum Owner must pay Contractor, subject to approved changes.
• "Exhibits" means documents attached to this Agreement, such as drawings, specifications, schedules, or cost breakdowns.

23. Signatures

By signing below, Parties acknowledge that they have read, understood, and agreed to the terms of this Agreement.