CONSTRUCTION SERVICES AGREEMENT
(Private Works – State of California)
[// GUIDANCE: This template is intentionally comprehensive. Practitioners should delete bracketed guidance, confirm all factual blanks, and tailor provisions to project-specific requirements before execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Scope of Work & Performance Standards
- Contract Sum; Payment; Retainage; Lien Compliance
- Representations & Warranties
- Covenants & Restrictions
- Changes in the Work
- Insurance & Bonds
- Risk Allocation
- Default; Remedies; Suspension & Termination
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
Construction Services Agreement (“Agreement”) made and entered into as of [EFFECTIVE DATE] (“Effective Date”) by and between:
• [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS] (“Owner”); and
• [CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS] (“Contractor,” and together with Owner, the “Parties,” and each a “Party”).
1.01 Recitals
A. Owner desires to engage Contractor to furnish certain construction services for the project described herein.
B. Contractor is duly licensed in the State of California, possesses the requisite skill, experience, personnel, and resources to perform the Work (as defined below), and wishes to do so in accordance with the terms and conditions of this Agreement.
C. The Parties enter into this Agreement in consideration of the mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged.
2. DEFINITIONS
The following capitalized terms have the meanings set forth below. All references to Sections are to Sections of this Agreement unless otherwise indicated.
“Applicable Law” – All federal, state, and local statutes, regulations, ordinances, codes, rules, orders, and case law governing the Work, including without limitation California mechanics lien laws and prevailing wage requirements where applicable.
“Change Order” – A written instrument signed by the Parties authorizing a modification to the Work, Contract Time, or Contract Sum.
“Construction Documents” – The drawings, plans, specifications, and other documents listed in Exhibit A, including all approved revisions and Change Orders.
“Contract Price” – The not-to-exceed amount of $[AMOUNT] payable to Contractor for performance of the Work, as adjusted by any Change Orders.
“Contract Time” – The period commencing on the Notice to Proceed and expiring upon Substantial Completion, as may be extended in accordance with this Agreement.
“Final Completion” – The date on which (i) the Work is fully completed in accordance with the Contract Documents, (ii) all punch-list items are resolved, and (iii) all close-out deliverables (including Unconditional Final Lien Waivers) are delivered to Owner.
“Lien Release Forms” – Statutory conditional and unconditional progress and final waiver forms appropriate for California private works.
“Notice to Proceed” – Owner’s written authorization for Contractor to commence the Work.
“Retainage” – The portion of each progress payment withheld by Owner pursuant to Section 4.04.
“Substantial Completion” – The stage in the progress of the Work when the Project is sufficiently complete, in accordance with the Contract Documents, so that Owner may occupy or utilize the Project for its intended use.
“Work” – All labor, materials, equipment, and services required to be performed or furnished by Contractor under this Agreement.
[Additional definitions may be inserted alphabetically as required.]
3. SCOPE OF WORK & PERFORMANCE STANDARDS
3.01 Scope of Work. Contractor shall execute and complete the Work described in Exhibit A in strict conformity with the Construction Documents and Applicable Law.
3.02 Performance Standards.
a. Workmanship. Contractor shall perform the Work in a good, workmanlike, and professional manner, using new materials of first-class quality.
b. Licensure. Contractor shall maintain all licenses, registrations, and certifications required for the Work.
c. Schedule. Contractor shall achieve Substantial Completion on or before [DATE], subject only to extensions approved in accordance with Section 7.
d. Supervision and Safety. Contractor shall supervise and direct the Work, taking all necessary precautions for the safety of persons and property and complying with all safety Laws and regulations.
4. CONTRACT SUM; PAYMENT; RETAINAGE; LIEN COMPLIANCE
4.01 Contract Price. Owner shall pay Contractor the Contract Price for full performance of the Work, subject to additions and deductions per Change Orders.
4.02 Schedule of Values & Invoicing.
a. Contractor shall submit for Owner’s approval a detailed Schedule of Values allocating the Contract Price among the various portions of the Work.
b. On or before the [DAY] of each month, Contractor shall submit a payment application for Work performed during the preceding period, supported by (i) a sworn statement of amounts due to all lower-tier parties, (ii) statutory Conditional Progress Payment Lien Releases from Contractor and all subcontractors/suppliers, and (iii) any other documentation reasonably required by Owner or Lender.
4.03 Payment Timing. Provided the application is uncontested, Owner shall pay approved amounts within [NUMBER] days after receipt.
4.04 Retainage. Owner may withhold retainage not exceeding five percent (5%) of each progress payment. Retainage shall be reduced or released in accordance with Applicable Law but in all events no later than Final Completion.
[// GUIDANCE: California law generally caps retainage on private works at 5%. Verify any project-specific exceptions (e.g., multifamily, design-build) before finalizing.]
4.05 Lien Compliance; Preliminary Notice.
a. Preliminary Notice. Contractor shall serve a valid California twenty-day Preliminary Notice on Owner, the construction lender (if any), and the reputed construction lender (if different) within the statutory time frame.
b. Lien Releases. Contractor shall, as a condition precedent to each payment, furnish statutory lien releases in the correct forms.
c. Stop Notices. If a Stop Notice is received, Owner may withhold sums required by Applicable Law until the Stop Notice is released or bonded.
d. Final Release. As a condition precedent to final payment, Contractor shall deliver Unconditional Final Lien Releases from itself and all lower-tier claimants.
4.06 Payment Bond. If the Contract Price exceeds $[DOLLAR THRESHOLD] or if required by Owner’s lender, Contractor shall furnish a payment bond in an amount equal to 100% of the Contract Price, issued by a surety licensed to do business in California and otherwise acceptable to Owner.
4.07 No Waiver. Progress or final payment shall not constitute acceptance of defective Work or waiver of any of Owner’s rights.
5. REPRESENTATIONS & WARRANTIES
5.01 By Contractor. Contractor represents and warrants that:
a. Organization & Authority. It is duly organized, validly existing, in good standing, and legally authorized to perform the Work.
b. No Conflict. Execution and performance of this Agreement will not violate any Agreement or Law binding upon Contractor.
c. Licensure. Contractor holds and will maintain throughout the Contract Time an active California contractor’s license of the proper classification.
d. Compliance. All Work will comply with the Construction Documents, Applicable Law, and prevailing industry standards.
e. Title. Upon payment, good and marketable title to all materials and equipment will pass to Owner free of liens, claims, and encumbrances.
5.02 Survival. The warranties in this Section survive completion, termination, and final payment for the longest period permitted under Applicable Law.
6. COVENANTS & RESTRICTIONS
6.01 Affirmative Covenants. Contractor shall:
a. Maintain accurate books and records and allow Owner reasonable access for audit.
b. Provide written notice to Owner within three (3) days of any event or condition that could materially delay the Work or increase the Contract Price.
c. Comply with all environmental, OSHA, and hazardous materials regulations.
6.02 Negative Covenants. Contractor shall not:
a. Assign this Agreement or subcontract all or substantially all of the Work without Owner’s prior written consent.
b. Create or permit any lien or encumbrance other than in favor of Owner on the Project site.
6.03 Notice & Cure. Except as otherwise provided herein, a Party claiming the other Party is in breach shall give written notice describing the breach with reasonable specificity. The breaching Party shall have ten (10) days (or such other period expressly provided) to cure monetary defaults and fourteen (14) days to cure non-monetary defaults.
7. CHANGES IN THE WORK
7.01 Owner-Directed Changes. Owner may, without invalidating this Agreement, order additions, deletions, or revisions in the Work by issuing a Change Order.
7.02 Change Order Pricing. Adjustments to the Contract Price shall be computed on one of the following bases, as elected by Owner: (i) lump-sum; (ii) unit prices; (iii) cost of the Work plus a fixed fee of [__]% for overhead and profit.
7.03 Claims for Additional Time or Money. Contractor’s failure to submit a written claim within seven (7) days after the event giving rise to the claim constitutes a waiver.
8. INSURANCE & BONDS
8.01 Contractor Insurance. Contractor shall maintain, at its sole cost, the following minimum coverages:
a. Commercial General Liability – $[LIMIT] per occurrence / $[LIMIT] aggregate.
b. Automobile Liability – $[LIMIT] combined single limit.
c. Workers’ Compensation – Statutory limits; Employer’s Liability – $[LIMIT].
d. Builder’s Risk (if Contractor is responsible) – Completed value form insuring the Project against “all risks” of physical loss.
8.02 Additional Insured; Waiver of Subrogation. Owner, its affiliates, and lender(s) shall be named as additional insureds (except Workers’ Compensation). All policies shall provide a waiver of subrogation in favor of the additional insureds.
8.03 Surety Bonds. Performance and payment bonds, if required, shall be in the form set forth in Exhibit B.
9. RISK ALLOCATION
9.01 Indemnification by Contractor. To the fullest extent permitted by law, Contractor shall indemnify, defend, and hold harmless Owner, its officers, directors, employees, agents, and representatives (“Indemnitees”) from and against any and all claims, damages, losses, liabilities, penalties, fines, and expenses (including reasonable attorneys’ fees) arising out of or related to:
a. bodily injury, sickness, disease, or death of any person;
b. damage to or destruction of property (other than the Work itself); or
c. violation of Applicable Law;
to the extent caused by the negligent, willful, or unlawful acts or omissions of Contractor, its subcontractors, or anyone for whom Contractor is legally responsible.
[// GUIDANCE: This language is drafted to comply with California’s anti-indemnity statutes limiting indemnity for active negligence or willful misconduct by Owner.]
9.02 Limitation of Liability. Notwithstanding anything to the contrary, the cumulative liability of either Party to the other for all claims arising under this Agreement (excluding Contractor’s indemnity obligations for third-party claims covered by insurance and obligations to pay subcontractors and suppliers) shall not exceed the Contract Price. Neither Party shall be liable for special, incidental, consequential, or punitive damages.
9.03 Force Majeure. Neither Party shall be liable for delay or failure to perform due to causes beyond its reasonable control, including acts of God, governmental actions, pandemics, labor disputes, or material shortages, provided the affected Party gives notice within five (5) days of the event and resumes performance diligently thereafter.
10. DEFAULT; REMEDIES; SUSPENSION & TERMINATION
10.01 Events of Default – Contractor.
a. Failure to prosecute the Work diligently or adhere to the project schedule;
b. Failure to pay subcontractors or suppliers when due;
c. Breach of any material covenant, representation, or warranty;
d. Insolvency, bankruptcy, or assignment for the benefit of creditors.
10.02 Owner Remedies. Upon a Contractor default and failure to cure within the applicable period, Owner may, without prejudice to any other rights:
i. supplement Contractor’s forces and back-charge actual costs;
ii. assume control of the Work and deduct completion costs;
iii. enforce bond or other security; and/or
iv. terminate for cause pursuant to Section 10.04.
10.03 Suspension by Owner. Owner may, for its convenience, order a temporary suspension of the Work. Contractor shall protect and secure the Work during the suspension and shall be entitled to an equitable adjustment of Contract Time and Price for reasonable, verifiable costs of demobilization and remobilization.
10.04 Termination.
a. Termination for Cause. Owner may terminate upon seven (7) days’ written notice if Contractor is in default under Section 10.01 and fails to cure.
b. Termination for Convenience. Owner may terminate without cause upon fourteen (14) days’ notice. Contractor shall cease Work and submit a final invoice for Work satisfactorily performed to date plus reasonable, direct, out-of-pocket demobilization costs.
11. DISPUTE RESOLUTION
11.01 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without giving effect to conflicts-of-law principles.
11.02 Forum Selection. Any action arising out of or relating to this Agreement shall be filed exclusively in the state courts located in [COUNTY], California.
11.03 Optional Arbitration. [OPTIONAL – CHECK ONE:]
☐ Arbitration Elected. Any dispute shall be resolved by binding arbitration administered by JAMS in accordance with its Construction Arbitration Rules. Judgment on the award may be entered in any court of competent jurisdiction.
☐ Arbitration Not Elected. Disputes shall be resolved in the state courts identified in Section 11.02.
11.04 Mediation Condition Precedent. As a condition precedent to litigation or arbitration, the Parties shall first participate in non-binding mediation administered by [MEDIATION SERVICE] within thirty (30) days of the request for mediation.
11.05 Jury Trial Waiver. [OPTIONAL] The Parties knowingly and voluntarily waive any right to a trial by jury in any action or proceeding arising out of this Agreement.
11.06 Injunctive Relief. Notwithstanding anything herein, either Party may seek provisional or injunctive relief from a court of competent jurisdiction to prevent irreparable harm.
12. GENERAL PROVISIONS
12.01 Entire Agreement; Integration. This Agreement, together with the Exhibits and all duly executed Change Orders, constitutes the entire agreement between the Parties and supersedes all prior proposals, negotiations, or representations.
12.02 Amendments; Waivers. No amendment or waiver is effective unless in writing and signed by authorized representatives of both Parties. A waiver on one occasion is not a waiver on any other occasion.
12.03 Assignment. Contractor shall not assign or delegate its rights or obligations without Owner’s prior written consent. Any attempted assignment in violation of this Section is void.
12.04 Successors & Assigns. This Agreement binds and benefits the Parties and their respective successors and permitted assigns.
12.05 Severability. If any provision is determined invalid or unenforceable, the remainder shall remain in effect, and the Parties shall negotiate a valid substitute provision that most nearly achieves the same economic effect.
12.06 Notices. All notices shall be in writing and delivered by (i) personal delivery, (ii) nationally recognized overnight courier, or (iii) certified U.S. mail, return-receipt requested, addressed to the receiving Party at the address set forth above (or as later changed by notice). Notices are effective upon receipt or first refusal.
12.07 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and together constitute one instrument. Signatures transmitted via PDF or reputable electronic signature platform shall be deemed originals.
12.08 Independent Contractor. Contractor is an independent contractor and not an agent or employee of Owner.
12.09 Time of the Essence. Time is of the essence for all obligations herein.
12.10 Interpretation. Section headings are for convenience only and do not affect interpretation. The Parties agree that ambiguities shall not be construed against the drafter.
13. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.
| OWNER | CONTRACTOR |
|---|---|
| [OWNER LEGAL NAME] | [CONTRACTOR LEGAL NAME] |
| By: ________ | By: ________ |
| Name: ______ | Name: ______ |
| Title: _____ | Title: _____ |
| Date: ______ | Date: ______ |
[Optional Notary Acknowledgments and Witness Lines may be inserted here if required by lender or recording office.]
EXHIBIT A
Scope of Work, Construction Documents, Schedule of Values, Milestone Schedule
EXHIBIT B
Form of Performance Bond and Payment Bond
EXHIBIT C
Insurance Requirements (Certificates & Additional Insured Endorsements)
[// GUIDANCE: Attach all exhibits before execution. Confirm that bond forms meet statutory conditions and lender requirements. Review local building department or county recorder requirements if the Agreement (or memorandum thereof) will be recorded to secure payment.]