CONSTRUCTION SERVICES AGREEMENT
(Illinois – Private Project)
[// GUIDANCE: This template is designed for private commercial or multi-unit residential projects governed by Illinois law. Practitioners should tailor bracketed items, confirm project-specific statutory requirements, and attach project documents (plans, specs, schedules, insurance certificates, bonds, etc.).]
TABLE OF CONTENTS
- Document Header
- Definitions
- Scope of Work
- Contract Price; Payment; Lien Compliance
- Time of Performance
- Changes in the Work
- Representations & Warranties
- Covenants
- Risk Allocation
- Default & Remedies
- Dispute Resolution
- Force Majeure
- Termination
- General Provisions
- Execution Block
1. DOCUMENT HEADER
Construction Services Agreement (this “Agreement”) made and entered into as of [EFFECTIVE DATE] (“Effective Date”) by and between:
• [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE] (“Owner”), having a principal place of business at [ADDRESS]; and
• [CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE] (“Contractor”), having a principal place of business at [ADDRESS].
Owner and Contractor are each a “Party” and collectively the “Parties.”
Recitals
A. Owner desires the construction, repair, alteration, and improvement of the project more fully described herein (“Project”) located at [SITE ADDRESS / LEGAL DESCRIPTION] (“Site”).
B. Contractor represents that it is duly qualified, licensed, and equipped to perform the Work (as defined below) in compliance with Applicable Law (as defined below), including the Illinois Mechanics Lien Act, 770 ILCS 60/1 et seq.
C. The Parties enter into this Agreement in consideration of the mutual covenants herein and other good and valuable consideration, the adequacy and receipt of which are acknowledged.
NOW, THEREFORE, the Parties agree as follows:
2. DEFINITIONS
[// GUIDANCE: Definitions are alphabetical. Capitalized terms used but not defined in a section have the meaning given below.]
“Applicable Law” means all federal, state, and local statutes, ordinances, regulations, and codes applicable to the Work, including without limitation: 770 ILCS 60/ (Illinois Mechanics Lien Act); 815 ILCS 603/ (Illinois Retainage Law); OSHA regulations (29 C.F.R. § 1926); and any building, fire, life-safety, environmental, or accessibility codes.
“Change Order” means a written, signed agreement modifying the Contract Price, Work, or Contract Time.
“Contract Documents” means, collectively, this Agreement, the Project plans and specifications, approved Change Orders, and the documents listed in Exhibit A.
“Contract Price” means the lump-sum or guaranteed maximum price of [CONTRACT PRICE IN WORDS AND NUMBERS], subject to adjustments pursuant to this Agreement.
“Contract Time” means the period beginning on the Commencement Date and expiring upon Final Completion, as adjusted.
“Final Completion” means the date on which (i) the Work is fully completed in accordance with the Contract Documents, (ii) all punch-list items are resolved, (iii) all close-out documents, warranties, as-builts, O&M manuals, and final lien waivers are delivered, and (iv) Owner issues final written acceptance.
“Retainage” has the meaning set forth in Section 4.4.
“Subcontractor” means any person or entity engaged by Contractor to furnish labor, services, or materials for the Project at any tier.
“Substantial Completion” means the date certified by Owner when the Work is sufficiently complete to permit beneficial occupancy or use for its intended purpose, notwithstanding minor incomplete or defective items.
“Work” means all labor, materials, equipment, and services required by or reasonably inferable from the Contract Documents to complete the Project.
3. SCOPE OF WORK
3.1 Performance. Contractor shall diligently, skillfully, and continuously perform the Work in strict conformity with the Contract Documents and Applicable Law, using new materials and first-class workmanship.
3.2 Supervision & Coordination. Contractor shall provide competent supervision, coordinate Subcontractors, and maintain the Site in a safe, orderly condition.
3.3 Licenses & Permits. Contractor shall obtain and pay for all permits, fees, licenses, inspections, and approvals required for the lawful execution of the Work.
4. CONTRACT PRICE; PAYMENT; LIEN COMPLIANCE
4.1 Schedule of Values. Within ten (10) days after the Effective Date, Contractor shall submit a schedule of values acceptable to Owner allocating the Contract Price among cost categories (“Schedule of Values”).
4.2 Applications for Payment.
(a) Frequency. Contractor may submit monthly Payment Applications on AIA G702/G703 or equivalent.
(b) Documentation. Each Payment Application shall include (i) updated sworn statements in the form required by 770 ILCS 60/5, (ii) conditional lien waivers from Contractor and all Subcontractors of every tier through the period covered, (iii) evidence of compliance with Section 8 (Insurance), and (iv) other documentation reasonably requested by Owner.
4.3 Payment. Owner shall pay approved amounts within thirty (30) days after receipt of a complete and undisputed Payment Application.
4.4 Retainage.
(a) Initial Withholding. Owner may withhold retainage not exceeding ten percent (10%) of the amount due as permitted by 815 ILCS 603/20(a).
(b) Reduction. When fifty percent (50%) of the Work is complete (as determined by Owner), retainage shall be reduced to five percent (5%) of further payments, and no additional retainage shall be withheld for Work thereafter satisfactorily performed, unless (i) Contractor is in material default or (ii) Owner reasonably determines additional retainage is necessary to protect against liens, defective work, or unpaid claims.
(c) Release. Retainage shall be released with final payment, conditioned upon Final Completion and delivery of final unconditional lien waivers.
4.5 Mechanics Lien Compliance.
(a) Notices. Contractor shall timely serve all notices and sworn statements required by 770 ILCS 60/, including notice to Owner of all Subcontractors and suppliers.
(b) Waivers. Contractor shall obtain and submit lien waivers (conditional and unconditional) in a form compliant with Illinois law from itself and all Subcontractors in conjunction with each Payment Application.
(c) Sworn Statements. Failure to provide a complete sworn statement is grounds for rejection of a Payment Application and a default under Section 10.
4.6 Payment & Performance Bond. If indicated in Exhibit B or required by Applicable Law, Contractor shall deliver, within ten (10) days of the Effective Date, a dual-obligee payment and performance bond in the amount of one hundred percent (100%) of the Contract Price, issued by a surety licensed in Illinois and listed on U.S. Treasury Circular 570.
4.7 Right to Withhold. Owner may withhold amounts (i) reasonably disputed, (ii) subject to asserted liens, (iii) necessary to complete defective or incomplete Work, or (iv) needed to protect Owner from third-party claims or Contractor default.
5. TIME OF PERFORMANCE
5.1 Commencement. Contractor shall commence the Work on [COMMENCEMENT DATE] or within five (5) days after receipt of a notice to proceed, whichever is earlier.
5.2 Substantial Completion. Contractor shall achieve Substantial Completion on or before [SUBSTANTIAL COMPLETION DATE].
5.3 Final Completion. Contractor shall achieve Final Completion within [NUMBER] days after Substantial Completion.
5.4 Delays & Extensions.
(a) Contractor shall be entitled to a time extension, but not monetary compensation, for delays caused solely by (i) acts of God, (ii) Owner-caused delays, or (iii) Force Majeure under Section 12, provided Contractor gives written notice within three (3) business days after the occurrence.
(b) Any time extension shall be documented by Change Order.
5.5 Liquidated Damages. [OPTIONAL – insert if Owner requires LDs.]
If Contractor fails to achieve Substantial Completion by the date in Section 5.2, Contractor shall pay Owner [LD AMOUNT] per calendar day, not as a penalty but as liquidated damages representing a fair estimate of Owner’s damages.
6. CHANGES IN THE WORK
6.1 Owner Initiated Changes. Owner may order changes by issuing a written Change Directive. Contractor shall promptly price the change and proceed upon mutual execution of a Change Order.
6.2 Contractor Claims. Contractor shall deliver written notice of any claim for additional time or compensation within five (5) days after the event giving rise to the claim; otherwise, the claim is waived.
6.3 Unilateral Owner Directive. In an emergency endangering life or property, Owner may direct Contractor to perform corrective Work on a time-and-materials basis.
7. REPRESENTATIONS & WARRANTIES
7.1 By Contractor. Contractor represents and warrants that:
(a) it is duly organized, validly existing, and in good standing;
(b) it possesses all licenses required for performance of the Work;
(c) its execution and performance will not violate any agreement binding on it;
(d) the Work will be performed in a good and workmanlike manner, free from defects, and in accordance with the Contract Documents for a period of one (1) year from Final Completion (“Warranty Period”); and
(e) all materials will be new, of good quality, and free of liens and encumbrances.
7.2 Survival. The warranties in this Section survive Final Completion and are in addition to any statutory or manufacturer warranties.
8. COVENANTS
8.1 Compliance with Laws. Contractor shall comply with Applicable Law, including prevailing wage requirements if applicable, equal employment opportunity obligations, and safety regulations.
8.2 Insurance. Contractor shall, at its sole expense, maintain the following minimum coverages until expiration of the Warranty Period:
(a) Commercial General Liability: $[1,000,000] per occurrence / $[2,000,000] aggregate;
(b) Workers’ Compensation: statutory limits;
(c) Employer’s Liability: $[1,000,000];
(d) Automobile Liability: $[1,000,000] combined single limit; and
(e) Builder’s Risk (if Contractor provides): replacement cost value of the Project.
Certificates of insurance naming Owner (and Construction Lender, if any) as additional insureds (on ISO CG 20 10 11 85 or equivalent) shall be delivered before the Commencement Date.
8.3 Books & Records; Audit. Contractor shall maintain complete cost records for six (6) years after Final Completion and make them available for Owner’s inspection upon reasonable notice.
8.4 Safety. Contractor is solely responsible for Site safety and shall implement a safety program meeting OSHA standards.
9. RISK ALLOCATION
9.1 Indemnification by Contractor. To the fullest extent permitted by law, Contractor shall indemnify, defend, and hold harmless Owner, its lenders, affiliates, and agents from and against any and all claims, damages, losses, liabilities, penalties, fines, and expenses (including reasonable attorney fees) arising out of or relating to (i) bodily injury, sickness, disease, or death of any person; (ii) damage to or loss of property; or (iii) violation of Applicable Law, in each case to the extent caused by the negligence, recklessness, or willful misconduct of Contractor, its Subcontractors, or anyone for whom they are responsible.
9.2 Limitation of Liability. Except for (i) Contractor’s indemnification obligations, (ii) claims arising from gross negligence or willful misconduct, or (iii) unpaid lien claims, Contractor’s aggregate liability to Owner under this Agreement shall not exceed the Contract Price.
9.3 No Consequential Damages. Neither Party shall be liable to the other for incidental, special, indirect, or consequential damages, including lost profits, except as provided in Section 5.5 (Liquidated Damages).
10. DEFAULT & REMEDIES
10.1 Contractor Events of Default.
(a) Failure to prosecute the Work with diligence;
(b) Failure to pay Subcontractors when due;
(c) Failure to comply with lien waiver or sworn statement requirements;
(d) Failure to maintain required insurance or bonds;
(e) Filing of bankruptcy or insolvency proceedings;
(f) Material breach of any covenant or warranty.
10.2 Owner Events of Default.
(a) Failure to make payments when due;
(b) Material breach of any covenant;
(c) Wrongful suspension of Work.
10.3 Notice & Cure. The non-defaulting Party shall give written notice specifying the default. The defaulting Party shall cure within:
(i) three (3) business days for safety violations or failure to maintain insurance;
(ii) five (5) business days for payment defaults; or
(iii) ten (10) business days for all other defaults.
10.4 Remedies.
(a) If Contractor defaults, Owner may (i) withhold payments, (ii) supplement or terminate Contractor and complete the Work, deducting completion costs from the unpaid Contract Price, and/or (iii) pursue any remedy at law or equity.
(b) If Owner defaults, Contractor may (i) suspend Work, (ii) terminate this Agreement, and (iii) recover unpaid amounts plus reasonable demobilization costs.
10.5 Attorneys’ Fees. The prevailing Party in any dispute shall be entitled to recover reasonable attorneys’ fees and costs.
11. DISPUTE RESOLUTION
11.1 Governing Law. This Agreement is governed by and construed in accordance with the laws of the State of Illinois, without regard to conflicts-of-law principles.
11.2 Forum Selection. State courts of competent jurisdiction located in [COUNTY], Illinois shall have exclusive jurisdiction and venue; provided, however, that either Party may file or remove an action to federal court if jurisdiction exists.
11.3 Arbitration. [OPTIONAL – DELETE IF NOT ELECTED]
(a) Any dispute not resolved by negotiation within thirty (30) days shall be resolved by binding arbitration administered by the American Arbitration Association under its Construction Industry Rules.
(b) The seat of arbitration shall be [CITY, IL]; judgment on the award may be entered in any court having jurisdiction.
11.4 Jury Waiver. [OPTIONAL – DELETE IF NOT ELECTED] EACH PARTY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
11.5 Injunctive Relief. Nothing in this Section limits either Party’s right to seek injunctive or equitable relief in a court of competent jurisdiction to prevent irreparable harm.
12. FORCE MAJEURE
Neither Party is liable for delay or failure in performance due to causes beyond its reasonable control, including acts of God, terrorism, epidemic, strikes (excluding strikes of the delayed Party’s own workforce), or governmental orders. The affected Party shall give prompt notice and mitigate the impact. Contract Time shall be equitably adjusted by Change Order.
13. TERMINATION
13.1 Termination for Cause. If a default is not cured within the period stated in Section 10.3, the non-defaulting Party may terminate the Agreement upon written notice.
13.2 Termination for Convenience. Owner may, at any time, terminate this Agreement for convenience upon seven (7) days’ written notice. Contractor shall be paid (i) for Work performed to date, (ii) verified costs reasonably incurred in termination, and (iii) a termination fee equal to [PERCENTAGE]% of the unpaid portion of the Contract Price, not to exceed statutory limits.
13.3 Obligations on Termination. Upon termination, Contractor shall (i) cease Work, (ii) assign subcontracts as directed by Owner, (iii) deliver all Work-in-progress, plans, and permits, and (iv) vacate the Site.
14. GENERAL PROVISIONS
14.1 Notices. All notices shall be in writing and deemed given when delivered personally, sent by recognized overnight courier, or mailed certified mail, return receipt requested, to the addresses in the Document Header (or as updated by notice).
14.2 Assignment. Contractor shall not assign or delegate its rights or obligations without Owner’s prior written consent. Any unauthorized assignment is void.
14.3 Independent Contractor. Contractor is an independent contractor; nothing creates an employment, joint venture, or partnership.
14.4 Entire Agreement; Amendment. The Contract Documents constitute the entire understanding and may be amended only by a written instrument signed by both Parties.
14.5 Severability. If any provision is held invalid, the remainder shall remain enforceable, and the invalid provision shall be reformed to the minimum extent necessary to effect its intent.
14.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each deemed an original, and signatures transmitted electronically (e.g., PDF, DocuSign) are binding.
14.7 Successors & Assigns. This Agreement binds and benefits the Parties and their respective successors and permitted assigns.
14.8 Interpretation. Section headings are for convenience only; “including” means “including without limitation.”
15. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
| OWNER | CONTRACTOR |
|---|---|
| [OWNER LEGAL NAME] | [CONTRACTOR LEGAL NAME] |
| By: _______ | By: _______ |
| Name: [PRINTED NAME] | Name: [PRINTED NAME] |
| Title: [TITLE] | Title: [TITLE] |
| Date: ______ | Date: ______ |
[NOTARY BLOCKS if required by lender or recording purposes]
EXHIBIT A – LIST OF CONTRACT DOCUMENTS
• Drawings dated
• Specifications dated
• Approved Change Orders (if any)
• Project Schedule dated __
• [Other]
EXHIBIT B – BOND REQUIREMENTS
[Attach payment & performance bond forms, penal sum, surety information]
EXHIBIT C – INSURANCE CERTIFICATES
[Attach ACORD forms]
[// GUIDANCE: Attach additional exhibits such as schedule of values, sworn statement template, waiver forms (recommended AIA G706/G706A adapted for Illinois), and safety plan as needed.]