CONSTRUCTION SERVICES AGREEMENT
(Delaware – Private Project)
[// GUIDANCE: This template is drafted for a private commercial project located in Delaware. Adapt for public-works jobs, residential work, or other project types as necessary.]
TABLE OF CONTENTS
- Document Header (Parties; Recitals)
- Definitions
- Scope of Work; Contract Documents
- Contract Time; Milestones
- Contract Price; Payment Terms
- Retainage; Lien Law Compliance
- Representations & Warranties
- Covenants
- Changes in the Work
- Insurance & Bonds
- Indemnification; Limitation of Liability
- Default; Termination; Remedies
- Dispute Resolution
- Miscellaneous Provisions
- Execution Block
1. DOCUMENT HEADER
CONSTRUCTION SERVICES AGREEMENT (“Agreement”) made effective as of [EFFECTIVE DATE] (the “Effective Date”), by and between:
a. [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE], with its principal place of business at [ADDRESS] (“Owner”); and
b. [CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE], with its principal place of business at [ADDRESS] (“Contractor”).
Collectively, Owner and Contractor are the “Parties” and each a “Party.”
1.1 Recitals
A. Owner desires to engage Contractor to furnish all labor, materials, equipment, and services necessary to complete the construction project described herein.
B. Contractor represents it is duly licensed, qualified, and willing to perform such work in accordance with Delaware law, including 25 Del. C. §§ 2701 et seq. (Mechanics’ Liens) and 6 Del. C. §§ 3501 et seq. (Contractor & Subcontractor Payment Act).
C. The Parties enter this Agreement in consideration of the mutual covenants herein.
NOW, THEREFORE, the Parties agree as follows:
2. DEFINITIONS
[// GUIDANCE: Add, delete, or modify defined terms to match project specifics.]
“Affiliate” – Any entity controlling, controlled by, or under common control with a Party.
“Application for Payment” – Contractor’s written request for progress payment pursuant to Section 5.4.
“Change Order” – A written amendment to the Scope of Work executed under Section 9.
“Contract Documents” – This Agreement; the drawings, specifications, and addenda listed in Exhibit A; approved Change Orders; and any other documents expressly incorporated herein.
“Contract Price” – The not-to-exceed amount of [INSERT AMOUNT], subject to adjustment only as provided herein.
“Final Completion” – The date on which Owner issues written acceptance that (i) the Work is complete in accordance with the Contract Documents, (ii) all close-out deliverables are received, and (iii) all liens have been released.
“Retainage” – The portion of each Progress Payment withheld by Owner pursuant to Section 6.2.
“Scope of Work” or “Work” – The construction and related services described in Exhibit A, as modified by Change Orders.
3. SCOPE OF WORK; CONTRACT DOCUMENTS
3.1 Contractor shall perform and complete the Work in a good and workmanlike manner, using new materials of first-class quality, and in strict conformity with the Contract Documents.
3.2 Contractor shall provide all supervision, labor, materials, equipment, tools, permits, fees, and services necessary for the proper execution and completion of the Work.
3.3 Hierarchy of Documents. In case of conflict, the following order of precedence governs: (i) Change Orders; (ii) this Agreement (excluding exhibits); (iii) exhibits in descending numeric order; (iv) bid documents; (v) Contractor’s proposal (if incorporated).
4. CONTRACT TIME; MILESTONES
4.1 Commencement. Contractor shall commence the Work within [___] days after the later of (i) the Effective Date, (ii) receipt of notice to proceed, or (iii) satisfaction of all conditions precedent specified in Section 5.1.
4.2 Substantial Completion. Contractor shall achieve Substantial Completion no later than [DATE] (“Substantial Completion Date”).
4.3 Final Completion. Contractor shall achieve Final Completion within [___] days after Substantial Completion.
4.4 Liquidated Damages. If Contractor fails to achieve Substantial Completion by the Substantial Completion Date, Contractor shall pay Owner liquidated damages of $[___] per day, not as a penalty but as a reasonable pre-estimate of Owner’s damages. [// GUIDANCE: Ensure LD amount complies with enforceability standards under Delaware law.]
5. CONTRACT PRICE; PAYMENT TERMS
5.1 Conditions Precedent to First Payment
a. Delivery of certificates of insurance per Section 10.
b. Delivery of performance and payment bonds (if required under Section 10.2).
c. Receipt of an IRS Form W-9 and other onboarding documents.
5.2 Schedule of Values. Within ten (10) days after the Effective Date, Contractor shall submit a Schedule of Values allocating the Contract Price among cost divisions for Owner’s approval.
5.3 Progress Payments. Owner shall make monthly progress payments equal to ninety-five percent (95 %) of the Work properly performed, less (i) Retainage pursuant to Section 6.2, (ii) prior payments, and (iii) any offsets authorized hereunder.
5.4 Application for Payment. Each Application for Payment shall:
a. be submitted on [AIA G702/703 or other approved form];
b. be accompanied by conditional lien waivers from Contractor and all first-tier subcontractors; and
c. certify compliance with all laws and that amounts due to laborers, suppliers, and subcontractors have been paid through the preceding pay period.
5.5 Payment Timing. Subject to Section 5.6, Owner shall pay approved Applications for Payment within twenty-one (21) days after receipt, consistent with 6 Del. C. § 3507.
5.6 Withholding. Owner may withhold payment for: (i) defective Work not remedied; (ii) third-party claims; (iii) failure to pay subcontractors; (iv) reasonable evidence the remaining Work cannot be completed for the unpaid balance; or (v) Contractor’s material breach.
6. RETAINAGE; LIEN LAW COMPLIANCE
6.1 Statutory Notice. Contractor is hereby advised of its obligations under 25 Del. C. §§ 2701 et seq. to timely record a mechanics’ lien to preserve lien rights. Contractor shall include in all subcontracts a written notice of such requirements.
6.2 Retainage. Owner shall withhold Retainage equal to five percent (5 %) of each Progress Payment, not to exceed the percentage permitted by Delaware law. Fifty percent (50 %) of accumulated Retainage shall be released upon Substantial Completion; the balance shall be released upon Final Completion and receipt of unconditional lien releases from Contractor and all subcontractors and suppliers.
6.3 Lien Releases. As a condition precedent to final payment, Contractor shall deliver (i) unconditional lien waivers in statutorily compliant form from itself and all subcontractors/suppliers, and (ii) an affidavit that all lawful claims have been satisfied.
6.4 Payment Bond. If Owner elects to require a payment bond, Contractor shall provide a bond in the penal sum of 100 % of the Contract Price, issued by a surety acceptable to Owner and licensed in Delaware. [29 Del. C. § 6962(c)(4) applies to public works; private projects may adopt similar standards.]
7. REPRESENTATIONS & WARRANTIES
7.1 Contractor represents and warrants that:
a. It holds all licenses, registrations, and permits required to perform the Work in Delaware.
b. The Work will be free from defects in workmanship and materials for a period of one (1) year from Final Completion (“Warranty Period”).
c. All materials furnished will be new and of good quality.
d. It is financially solvent and able to perform its obligations.
e. It has reviewed the Contract Documents and has no knowledge of errors or omissions that would render performance impossible or impracticable.
7.2 Survival. The warranties in this Section survive Final Completion and any termination of this Agreement.
8. COVENANTS
8.1 Compliance with Laws. Contractor shall comply with all applicable federal, state, and local laws, ordinances, regulations, and building codes (“Laws”), including OSHA and environmental regulations.
8.2 Safety. Contractor shall initiate, maintain, and supervise safety precautions and programs in connection with the Work.
8.3 Supervision & Staffing. Contractor shall supply competent supervision and sufficient labor to prosecute the Work promptly and diligently.
8.4 Notice of Delay or Defect. Contractor shall promptly notify Owner of any (i) event or condition that may delay the Work, or (ii) defects or discrepancies in the Contract Documents.
9. CHANGES IN THE WORK
9.1 Owner may order changes, additions, or deletions to the Work by written Change Order. Contractor shall not proceed with any change until the Change Order is executed by both Parties.
9.2 Adjustment to Contract Price or Time shall be mutually agreed in the Change Order. If the Parties cannot agree, pricing shall be determined on a time-and-materials basis using the unit rates in Exhibit B, and Contractor is entitled only to its direct costs plus [___] % markup for overhead and profit.
10. INSURANCE & BONDS
10.1 Insurance. Contractor shall maintain, at its sole cost:
a. Commercial General Liability – $1,000,000 per occurrence / $2,000,000 aggregate;
b. Auto Liability – $1,000,000 combined single limit;
c. Workers’ Compensation – statutory limits;
d. Employers’ Liability – $1,000,000;
e. Excess/Umbrella – $2,000,000 per occurrence.
Owner and its Affiliates shall be additional insureds on a primary and non-contributory basis (form CG 20 10 11 85 or equivalent).
10.2 Bonds. If required in Section 6.4 or Exhibit C, Contractor shall furnish performance and payment bonds, each in the full amount of the Contract Price, issued by a Treasury-listed surety rated A- or better by A.M. Best.
11. INDEMNIFICATION; LIMITATION OF LIABILITY
11.1 Indemnification by Contractor. To the fullest extent permitted by law, Contractor shall defend, indemnify, and hold harmless Owner, its Affiliates, and their respective officers, directors, employees, and agents (collectively, “Indemnitees”) from and against any and all claims, liabilities, damages, losses, and expenses (including reasonable attorneys’ fees) arising out of or resulting from the performance of the Work, but only to the extent caused by the negligent acts or omissions of Contractor, its subcontractors, or anyone directly or indirectly employed by them.
11.2 Limitation of Liability. EXCEPT FOR (i) CONTRACTOR’S INDEMNITY OBLIGATIONS, (ii) DAMAGES CAUSED BY CONTRACTOR’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AND (iii) DAMAGES THAT CANNOT BE LIMITED BY LAW, THE TOTAL LIABILITY OF CONTRACTOR TO OWNER UNDER THIS AGREEMENT SHALL NOT EXCEED THE CONTRACT PRICE.
11.3 No Consequential Damages. Neither Party shall be liable to the other for incidental, special, or consequential damages, including lost profits, arising out of or relating to this Agreement.
11.4 Injunctive Relief. Nothing herein limits either Party’s right to seek injunctive or other equitable relief to prevent or curtail an actual or threatened breach of Sections 8.1 (Compliance with Laws) or 11 (Indemnification).
12. DEFAULT; TERMINATION; REMEDIES
12.1 Events of Default. Each of the following constitutes a Contractor Default:
a. Failure to prosecute the Work diligently or to maintain the Project schedule;
b. Failure to pay subcontractors or suppliers when due;
c. Failure to comply with Laws or with Section 10 (Insurance & Bonds);
d. Material breach of any representation, warranty, or covenant;
e. Insolvency, bankruptcy filing, or assignment for benefit of creditors.
12.2 Notice & Cure. Owner shall give written notice specifying the default. Contractor shall cure within ten (10) days (or such longer period as Owner may allow provided Contractor commences cure within the ten-day period and diligently pursues completion).
12.3 Owner Remedies. If Contractor fails to cure within the applicable period, Owner may, without prejudice to other remedies:
a. Supplement or take over the Work and deduct the cost of completion from amounts due to Contractor;
b. Accept the defective or non-conforming Work and equitably reduce the Contract Price;
c. Terminate this Agreement for cause upon an additional five (5) days’ notice, in which event Owner may complete the Work and Contractor shall be liable for the excess cost.
12.4 Termination for Convenience. Owner may terminate for convenience upon seven (7) days’ written notice. Contractor shall be paid (i) the portion of the Contract Price allocable to Work properly executed, and (ii) reasonable, documented demobilization costs, not to exceed two percent (2 %) of the unpaid Contract Price.
12.5 Suspension. Owner may order Contractor to suspend the Work in whole or part for up to ninety (90) cumulative days. Schedule and compensation adjustments, if any, shall be as mutually agreed.
13. DISPUTE RESOLUTION
13.1 Governing Law. This Agreement is governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict-of-laws principles.
13.2 Forum Selection. The state courts located in [COUNTY, DE] shall have exclusive jurisdiction and venue over any action arising out of or relating to this Agreement, subject to Section 13.3.
13.3 Arbitration (Optional). If the Parties initial below, all disputes shall be resolved by binding arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules.
Owner Initials: __ Contractor Initials: ____
13.4 Jury Trial Waiver (Optional). IF NOT PROHIBITED BY LAW, EACH PARTY HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.
Owner Initials: __ Contractor Initials: ____
13.5 Attorney Fees. The prevailing Party in any litigation or arbitration shall be entitled to recover its reasonable attorneys’ fees, costs, and expenses.
14. MISCELLANEOUS PROVISIONS
14.1 Independent Contractor. Contractor is an independent contractor and not an employee or agent of Owner.
14.2 Assignment. Neither Party may assign this Agreement without the prior written consent of the other, except Owner may assign to its lender or successor-in-interest.
14.3 Entire Agreement; Amendments. This Agreement, including all exhibits, constitutes the entire agreement of the Parties and supersedes all prior negotiations. Amendments must be in a written instrument signed by both Parties.
14.4 Severability. If any provision is held unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to render it enforceable.
14.5 Notices. All notices shall be (i) in writing, (ii) addressed to the recipient’s address set forth above, and (iii) delivered by personal delivery, nationally recognized overnight courier, or registered mail (return receipt requested). Notice is effective upon delivery or first refusal.
14.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is an original and all of which together constitute one instrument. Electronic signatures shall be deemed originals.
14.7 Survival. Provisions that by their nature should survive termination or expiration (including Sections 5.6, 6, 7, 11, 12.5, 13, and 14) shall so survive.
15. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
OWNER:
[OWNER LEGAL NAME]
By: _____
Name: _____
Title: ______
Date: _______
CONTRACTOR:
[CONTRACTOR LEGAL NAME]
By: _____
Name: _____
Title: ______
Date: _______
[OPTIONAL NOTARIZATION BLOCK IF REQUIRED]
EXHIBIT A – SCOPE OF WORK
[Detailed description or incorporation of plans/specs]
EXHIBIT B – UNIT RATES / SCHEDULE OF VALUES
[Add as applicable]
EXHIBIT C – BOND FORMS
[Attach standard AIA A312 or equivalent forms]
[// GUIDANCE:
1. Verify project-specific retainage limits under 6 Del. C. §§ 3501 et seq.; adjust Section 6.2 as necessary.
2. For residential projects, review additional disclosure and lien-waiver timing requirements.
3. Confirm insurance limits with Owner’s risk management advisor.
4. Replace bracketed placeholders before execution.
]