The Construction Agreement: Elements, boilerplate template, and optional clauses
What is a Construction Agreement?
What are the main elements of a typical Construction Agreement?
- Description of the Project: This section outlines the scope of work, including project details such as location, size, materials, and specifications.
- Scope of Work: This section outlines the responsibilities and duties of the contractor, such as the completion of the work, the schedule, and any specific requirements.
- Contract Price: This section outlines the contract price for the project, including any allowances and unit prices, as well as the payment schedule.
- Changes to the Scope of Work: This section outlines the procedures for making changes to the project, including any necessary approvals, adjustments to the contract price, and extensions to the completion date.
- Permits and Approvals: This section outlines the requirements for obtaining necessary permits and approvals, such as building permits, zoning approvals, and environmental permits.
- Insurance and Bonding: This section outlines the insurance requirements for the project, including liability and workers’ compensation insurance, as well as any bonding requirements.
- Warranties and Guarantees: This section outlines the warranties and guarantees that the contractor provides for the work, including any defects or deficiencies that arise after the completion of the project.
- Termination and Default: This section outlines the conditions under which the contract can be terminated, as well as the consequences of default.
- Dispute Resolution: This section outlines the procedures for resolving disputes that arise during the project, including mediation, arbitration, and litigation.
- Miscellaneous Provisions: This section includes any other provisions that are not covered by the above sections, such as confidentiality provisions, governing law, and notices.
The following boilerplate template can be used on SimpleSignRequest.com
This Construction Agreement (the “Agreement”) is entered into on [date] by and between [Owner] (“Owner”), and [Contractor] (“Contractor”).
- Description of the Project.
Owner hereby engages Contractor to perform the following work (the “Work”): [description of the project, including location, size, materials, and specifications].
- Scope of Work.
Contractor shall perform the Work in accordance with the plans and specifications attached hereto as Exhibit A (the “Plans”) and any other documents referenced in this Agreement. Contractor shall be responsible for the completion of the Work in accordance with the schedule set forth in the Plans.
- Contract Price.
Owner shall pay Contractor the sum of [contract price] (the “Contract Price”) for the completion of the Work. The Contract Price includes all labor, materials, and equipment necessary for the completion of the Work, and is subject to the payment schedule set forth in Exhibit B.
- Changes to the Scope of Work.
Owner may request changes to the scope of the Work by submitting a change order request to Contractor. Contractor shall not commence any change to the scope of the Work without Owner’s prior written approval. If Owner approves a change to the scope of the Work, the parties shall execute a change order setting forth the adjusted Contract Price and any other necessary adjustments.
- Permits and Approvals.
Contractor shall obtain all necessary permits and approvals required for the performance of the Work, including but not limited to building permits, zoning approvals, and environmental permits.
- Insurance and Bonding.
Contractor shall maintain liability and workers’ compensation insurance, and any other insurance required by law or as reasonably requested by Owner. Contractor shall also provide a performance bond in the amount of [performance bond amount], which shall be maintained until completion of the Work.
- Warranties and Guarantees.
Contractor warrants that the Work will be performed in a workmanlike manner, in accordance with industry standards, and in compliance with all applicable laws and regulations. Contractor shall correct any defects or deficiencies in the Work that arise within [warranty period] after completion of the Work.
- Termination and Default.
Owner may terminate this Agreement for cause if Contractor breaches any material term of this Agreement or fails to perform the Work in accordance with the Plans. In the event of termination, Owner may complete the Work through a third party and deduct the cost of completion from any amounts due to Contractor.
- Dispute Resolution.
Any dispute arising under this Agreement shall be resolved through mediation, and if mediation is unsuccessful, through binding arbitration in accordance with the rules of the American Arbitration Association. Any judgment rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
- Miscellaneous Provisions.
This Agreement contains the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements between the parties. This Agreement shall be governed by and construed in accordance with the laws of the State of [governing law]. Any notices required or permitted under this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, to the parties at the addresses set forth below their signatures.
Owner: [Owner Signature]
Owner: [Owner Name]
Date: [Owner Sign Date]
By Contractor: [Contractor Signature]
Name: [Contractor Signature]
Date: [Contractor Sign Date]
What are some optional clauses that can be added to a Construction Agreement?
In addition to the main elements, a Construction Agreement may include optional clauses that address specific issues or concerns that the parties wish to address. Some examples of optional clauses that may be included in a Construction Agreement include:
- Liquidated Damages:This clause establishes a predetermined amount of damages that the Contractor will be required to pay if they fail to meet certain deadlines or milestones.
- Indemnification:This clause outlines the extent to which one party will be responsible for any damages or losses suffered by the other party.
- Change in Law:This clause provides for adjustments to the Contract Price or completion date in the event that there is a change in applicable laws or regulations that affects the project.
- Force Majeure:This clause excuses the parties from performing their obligations under the Agreement in the event of unforeseeable circumstances beyond their control, such as natural disasters, acts of terrorism, or government actions.
- Assignment and Subcontracting:This clause sets forth the circumstances under which the parties may assign their rights and obligations under the Agreement or subcontract the performance of the Work to a third party.
- Dispute Resolution Forum:This clause specifies the forum in which any disputes arising under the Agreement will be resolved, such as arbitration or litigation.
- Retainage:This clause allows Owner to withhold a certain percentage of the Contract Price until the completion of the Work to ensure that the Contractor fulfills all of its obligations under the Agreement.
- Time is of the Essence:This clause emphasizes the importance of meeting deadlines and milestones and establishes that time is a critical component of the Agreement.
- Governing Law and Jurisdiction:This clause specifies the governing law and jurisdiction that will apply to any disputes arising under the Agreement.
- Intellectual Property:This clause addresses ownership and use of any intellectual property, such as plans, designs, or other materials created or used in connection with the project.