CONSTRUCTION SERVICES AGREEMENT
(Kentucky – Private Project)
[// GUIDANCE: This template is designed for private, non-governmental construction projects located in Kentucky. Customize all bracketed placeholders, delete optional language that does not apply, and add project-specific exhibits (plans, specifications, schedule of values, etc.).]
THIS CONSTRUCTION SERVICES AGREEMENT (the “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
-
[OWNER LEGAL NAME], a [STATE] [ENTITY TYPE] having its principal place of business at [ADDRESS] (“Owner”); and
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[CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE] having its principal place of business at [ADDRESS] (“Contractor”).
Owner and Contractor are each referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
A. Owner is the fee simple owner and/or duly authorized representative of the property located at [PROJECT ADDRESS / LEGAL DESCRIPTION] (the “Property”).
B. Owner desires to engage Contractor to furnish all labor, materials, equipment, and services necessary to construct [PROJECT DESCRIPTION] (the “Project”).
C. Contractor represents that it is duly licensed and qualified to perform construction services in the Commonwealth of Kentucky.
D. In consideration of the mutual promises herein, the Parties agree as follows:
TABLE OF CONTENTS
- Definitions
- Scope of Work
- Contract Documents & Order of Precedence
- Contract Sum, Retainage & Payment Procedures
- Time for Performance; Schedule
- Lien Compliance & Payment Bond
- Representations & Warranties
- Covenants
- Changes in the Work
- Insurance & Risk Allocation
- Indemnification
- Limitation of Liability
- Events of Default & Remedies
- Suspension & Termination
- Dispute Resolution
- General Provisions
- Execution
1. DEFINITIONS
For purposes of this Agreement, capitalized terms shall have the meanings set forth below.
“Applicable Law” means all federal, state, and local statutes, ordinances, regulations, building codes, and case law applicable to the Project, including without limitation Kentucky lien laws (currently codified at KRS Chapter 376).
“Change Order” means a written modification to the Contract Documents executed by authorized representatives of both Parties pursuant to Section 9.
“Claim” means any claim, demand, cause of action, loss, damage, liability, cost, or expense (including reasonable attorneys’ fees).
“Contract Documents” has the meaning given in Section 3.1.
“Contract Sum” means the lump sum of $[AMOUNT] (subject to adjustments only as expressly permitted herein).
“Day” means a calendar day unless otherwise specified.
“Final Completion” means completion of all Work, correction of all punch-list items, delivery of all close-out documentation, and issuance of final payment to Contractor.
“Force Majeure Event” has the meaning given in Section 10.4.
“Retainage” has the meaning given in Section 4.2.
“Substantial Completion” means the stage in the progress of the Work when the Project is sufficiently complete, in accordance with the Contract Documents, so that Owner can occupy or utilize the Project for its intended use.
“Work” means all labor, services, materials, tools, equipment, and other items furnished by Contractor under this Agreement.
[// GUIDANCE: Add or delete definitions as needed. Maintain alphabetical order.]
2. SCOPE OF WORK
2.1 Performance. Contractor shall diligently perform and complete the Work in strict conformity with the Contract Documents and Applicable Law, using its best skill and workmanship.
2.2 Standard of Care. Contractor shall perform the Work (a) in a good and workmanlike manner, (b) in accordance with generally accepted construction industry standards, and (c) consistent with all manufacturer requirements and the Kentucky Building Code.
2.3 Supervision & Labor. Contractor shall provide competent supervision and sufficient qualified personnel to timely perform the Work.
2.4 Safety. Contractor is solely responsible for safety on the Project and shall comply with all OSHA and Kentucky Occupational Safety and Health standards.
2.5 Cleanup. Contractor shall keep the Project free from accumulation of waste materials and debris resulting from the Work and shall remove all such debris at its own cost upon Final Completion or as otherwise required.
3. CONTRACT DOCUMENTS & ORDER OF PRECEDENCE
3.1 Contract Documents. The following, collectively, constitute the “Contract Documents”:
a) This Agreement (including all exhibits and attachments);
b) The Drawings and Specifications prepared by [ARCHITECT/ENGINEER NAME], dated [DATE];
c) Approved Change Orders and written amendments;
d) The Project schedule attached as Exhibit [ ];
e) Any other documents listed in Exhibit [ ].
3.2 Order of Precedence. In the event of a conflict among the Contract Documents, the document higher in the list of Section 3.1 shall control unless expressly stated otherwise.
4. CONTRACT SUM, RETAINAGE & PAYMENT PROCEDURES
4.1 Contract Sum. Owner shall pay Contractor the Contract Sum, subject to additions and deductions as provided herein.
4.2 Retainage. Owner may withhold retainage (“Retainage”) from each progress payment in an amount not exceeding ten percent (10%) of the portion of the Contract Sum then payable; provided, however, once the Work is fifty percent (50%) complete and Contractor is not in default, Retainage shall thereafter be reduced to five percent (5%) of subsequent progress payments. All Retainage shall be released no later than thirty (30) Days after Substantial Completion, subject to Owner’s right to withhold amounts necessary to cover unresolved claims or incomplete punch-list items.
[// GUIDANCE: Kentucky law imposes a 10% cap on retainage for private projects and requires release upon substantial completion. Verify compliance before finalizing.]
4.3 Schedule of Values. Contractor shall submit a schedule of values (SOV) acceptable to Owner within five (5) Days after the Effective Date. The SOV shall allocate the Contract Sum among labor and materials in a form suitable for progress payments.
4.4 Progress Payments.
a) Application. On or before the [DAY] day of each month, Contractor shall submit an application for payment covering Work performed during the preceding period, supported by (i) a sworn statement; (ii) updated lien waiver forms from Contractor and all subcontractors and suppliers; and (iii) such other documentation as Owner may reasonably require.
b) Certification & Payment. Within seven (7) Days after receipt, Owner shall review the application and notify Contractor of any disputed items. Owner shall pay the undisputed amount within fourteen (14) Days after approval.
4.5 Final Payment. Contractor shall be entitled to final payment of the unpaid Contract Sum, including retained amounts, upon (a) Final Completion; (b) delivery of final lien waivers from Contractor and all subcontractors and suppliers; (c) submission of as-built drawings, warranties, operation manuals, and all close-out documents; and (d) delivery of a final affidavit that all payrolls, bills for materials, and other indebtedness connected with the Work have been paid.
4.6 Interest. Payments not made when due shall accrue interest at the lower of (a) one percent (1%) per month or (b) the maximum rate allowed by Applicable Law.
4.7 Set-off. Owner may offset any amounts due and owing to Contractor against any amounts Contractor owes Owner under this Agreement or otherwise.
5. TIME FOR PERFORMANCE; SCHEDULE
5.1 Commencement & Substantial Completion. Contractor shall commence the Work within [X] Days after receipt of a written Notice to Proceed and shall achieve Substantial Completion by [SUBSTANTIAL COMPLETION DATE].
5.2 Time Is of the Essence. Time is of the essence for all milestones set forth in the Project schedule.
5.3 Delays & Extensions. Contractor is entitled to an extension of time, but not compensation, for delays caused solely by (a) Force Majeure Events, (b) unanticipated concealed conditions, or (c) Owner-caused delays, provided Contractor gives Owner written notice within two (2) Days after the occurrence.
6. LIEN COMPLIANCE & PAYMENT BOND
6.1 Pre-Lien Notice to Owner. Contractor shall furnish Owner with a written notice containing the names of all first-tier subcontractors and material suppliers within fifteen (15) Days after first furnishing labor or materials to the Project, as required by Kentucky’s mechanics’ lien statutes.
6.2 Monthly Lien Waivers. As a condition precedent to any payment, Contractor shall deliver (a) a conditional waiver and release on progress payment and (b) conditional waivers from all subcontractors and suppliers whose work is included in the payment application. Upon actual receipt of funds, each conditional waiver automatically becomes unconditional.
6.3 Payment Bond. If the Contract Sum exceeds $[THRESHOLD], Contractor shall furnish, concurrently with execution of this Agreement, a payment bond in the penal sum of 100% of the Contract Sum, written by a surety acceptable to Owner. The bond shall remain in force until one (1) year after Final Completion.
[// GUIDANCE: For public Kentucky projects, bonds are statutory; on private projects, they are contractual. Adjust threshold as needed (e.g., “any contract exceeding $100,000”).]
6.4 Release of Liens. Contractor shall, at its sole cost, promptly discharge any lien filed against the Property arising out of the Work, whether filed by Contractor, its subcontractors, or suppliers.
6.5 Owner’s Right to Pay & Deduct. If Contractor fails to discharge a lien within seven (7) Days after written demand, Owner may pay the lien claimant directly and deduct such amount (plus reasonable attorneys’ fees and administrative costs) from sums due Contractor.
7. REPRESENTATIONS & WARRANTIES
7.1 Contractor represents and warrants that:
a) It is duly organized, validly existing, in good standing, and qualified to do business in Kentucky;
b) It is properly licensed under KRS Chapter 322 (professional engineering, if applicable) and/or KRS Chapter 323 (architecture, if applicable) and maintains all required contractor licenses;
c) It has the expertise, financial capacity, personnel, and equipment to perform the Work;
d) All materials and equipment furnished shall be new and of good quality unless otherwise specified;
e) The Work shall be free from defects in material and workmanship for a period of one (1) year after Substantial Completion (“Warranty Period”);
f) Performance of the Work will not infringe any patent, copyright, or trade secret.
7.2 Survival. The representations and warranties of this Section 7 shall survive Substantial Completion and any termination of this Agreement.
8. COVENANTS
8.1 Compliance with Law. Contractor shall strictly comply with all Applicable Law, including prevailing wage obligations (if any), environmental requirements, and lien statutes.
8.2 Permits & Taxes. Contractor shall obtain and pay for all permits, licenses, inspections, and taxes required in connection with the Work, except those expressly required by contract to be obtained or paid by Owner.
8.3 Labor Harmony. Contractor shall take all reasonable steps to prevent labor disputes and strikes that could affect the Project.
8.4 Notice of Events. Contractor shall promptly notify Owner in writing of (a) any material deviation from the schedule, (b) accidents or injuries on the Project, (c) violations or potential violations of Applicable Law, or (d) any Claim that may give rise to Owner liability.
8.5 Non-Assignment. Contractor shall not assign this Agreement or subcontract all or substantially all of the Work without Owner’s prior written consent.
9. CHANGES IN THE WORK
9.1 Owner-Directed Changes. Owner may, without invalidating this Agreement, order changes in the Work by issuing a written Change Order.
9.2 Contractor-Requested Changes. Contractor shall not perform any change in the Work without a Change Order signed by Owner.
9.3 Pricing of Changes. Adjustments to the Contract Sum shall be (a) by mutual lump-sum agreement, (b) by unit prices stated in the Contract Documents, or (c) on a time-and-materials basis with a markup of [ ]% for overhead and profit.
9.4 Disputed Changes. If the Parties disagree on entitlement or price, Contractor shall proceed with the changed Work and shall keep contemporaneous records for later resolution pursuant to Article 15.
10. INSURANCE & RISK ALLOCATION
10.1 Contractor Insurance. Contractor shall, at its own expense, maintain insurance in the following minimum limits:
a) Commercial General Liability: $[ ] per occurrence / $[ ] aggregate;
b) Workers’ Compensation: statutory limits;
c) Employer’s Liability: $[ ];
d) Commercial Automobile Liability: $[ ];
e) Umbrella/Excess Liability: $[ ].
10.2 Certificates. Certificates of insurance evidencing the required coverage shall be delivered to Owner before commencing the Work and shall provide at least thirty (30) Days’ advance written notice of cancellation or material change.
10.3 Builder’s Risk. Owner [CHECK ONE] ☐ shall ☐ shall not provide an “all-risk” builder’s risk policy covering the Work. If Owner does not provide such coverage, Contractor shall obtain equivalent insurance and may include the cost in the Contract Sum.
10.4 Force Majeure. Neither Party shall be liable for delays or failure to perform due to causes beyond its reasonable control (“Force Majeure Event”), including natural disasters, acts of terrorism, riots, war, or widespread labor strikes, provided the affected Party gives written notice within two (2) Days after becoming aware of the Force Majeure Event.
11. INDEMNIFICATION
11.1 Contractor Indemnity. To the fullest extent permitted by law, Contractor shall indemnify, defend, and hold harmless Owner, its lenders, consultants, and agents (collectively, the “Indemnitees”) from and against all Claims arising out of or resulting from (a) the performance of the Work, (b) any breach of this Agreement by Contractor, or (c) the negligence or willful misconduct of Contractor or its subcontractors, except to the extent caused by the sole negligence of Owner.
11.2 Defense Obligation. Contractor’s duty to defend is separate and independent of its duty to indemnify and arises immediately upon notice of a Claim.
11.3 No Limitation. The indemnity obligations herein shall not be limited by any insurance requirements, limitations of liability, or caps on damages.
12. LIMITATION OF LIABILITY
12.1 Cap. Notwithstanding any provision herein to the contrary, the cumulative liability of Contractor to Owner for direct damages arising out of this Agreement shall not exceed the Contract Sum.
12.2 Exclusion of Consequential Damages. Neither Party shall be liable to the other for consequential, incidental, or punitive damages, including lost profits, loss of financing, or loss of use, except for damages arising from (a) fraud, (b) willful misconduct, or (c) indemnification obligations for third-party claims.
[// GUIDANCE: Verify that the limitation aligns with your client’s risk tolerance. Some owners may reject caps.]
13. EVENTS OF DEFAULT & REMEDIES
13.1 Contractor Default. Each of the following constitutes a “Contractor Default”:
a) Failure to prosecute the Work diligently or in accordance with the schedule;
b) Failure to pay subcontractors or suppliers when due;
c) Filing of a voluntary or involuntary bankruptcy petition;
d) Material breach of any covenant, representation, or warranty, if not cured within seven (7) Days after written notice;
e) Failure to maintain required insurance.
13.2 Owner Remedies. Upon a Contractor Default, Owner may, after two (2) Days’ notice, without prejudice to any other right or remedy:
a) Suspend the Work;
b) Perform or procure performance of the defaulted obligations and deduct the cost from payments due Contractor;
c) Terminate this Agreement for cause under Section 14.1;
d) Seek specific performance, injunctive relief, and/or damages.
13.3 Owner Default & Contractor Remedies. Owner shall be in default if it fails to make payment of undisputed amounts within fourteen (14) Days after written notice. Contractor’s sole remedies are (a) suspension of the Work, and (b) termination under Section 14.2, in each case after giving Owner an additional seven (7) Days’ notice.
13.4 Attorneys’ Fees. The prevailing Party in any dispute arising under this Agreement shall be entitled to recover its reasonable attorneys’ fees, expert fees, and costs.
14. SUSPENSION & TERMINATION
14.1 Termination by Owner for Cause. Owner may terminate this Agreement upon a Contractor Default that remains uncured after the notice and cure periods of Section 13.1. Owner may finish the Work by whatever method it deems expedient, and Contractor shall be liable for all costs in excess of the unpaid balance of the Contract Sum.
14.2 Termination by Contractor for Cause. Contractor may terminate this Agreement if (a) Owner fails to make timely payment of undisputed amounts, or (b) Work is stopped for more than sixty (60) Days due to no fault of Contractor.
14.3 Termination for Convenience. Owner may, at any time and for any reason, terminate this Agreement for convenience upon seven (7) Days’ written notice. Contractor shall be entitled to (a) payment for Work properly executed, (b) reasonable demobilization costs, and (c) a markup of [ ]% on uninstalled materials specifically fabricated for the Project, provided Contractor transfers title and delivers such materials to Owner.
15. DISPUTE RESOLUTION
15.1 Step-Negotiation. As a condition precedent to arbitration or litigation, senior executives of the Parties shall meet within seven (7) Days after a Party issues a written notice of dispute and attempt in good faith to resolve the dispute.
15.2 Mediation [OPTIONAL]. If the dispute is not resolved within fourteen (14) Days, either Party may demand non-binding mediation administered by [MEDIATION PROVIDER] in [CITY, KY]. Costs shall be shared equally.
15.3 Arbitration [SELECT ONE]:
☐ (a) The Parties agree that any dispute not resolved through negotiation or mediation shall be finally resolved by binding arbitration administered by the American Arbitration Association in accordance with its Construction Industry Arbitration Rules. Judgment on the award may be entered in any court having jurisdiction.
☐ (b) Arbitration is expressly rejected. Disputes shall be resolved exclusively in the state courts located in [COUNTY], Kentucky.
[// GUIDANCE: Choose the option that aligns with “Arbitration: optional” metadata.]
15.4 Jury Trial Waiver [OPTIONAL]. TO THE EXTENT PERMITTED BY LAW, EACH PARTY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATED TO THIS AGREEMENT.
15.5 Injunctive Relief. Nothing herein shall limit either Party’s right to seek temporary restraining orders, preliminary injunctions, or other interlocutory relief to prevent irreparable harm.
15.6 Governing Law & Forum. This Agreement shall be governed by the laws of the Commonwealth of Kentucky, without regard to conflicts-of-law principles. Subject to Section 15.3, the state courts of [COUNTY], Kentucky shall have exclusive jurisdiction.
16. GENERAL PROVISIONS
16.1 Independent Contractor. Contractor is an independent contractor and not an agent or employee of Owner.
16.2 Assignment. Neither Party may assign its rights or obligations without the prior written consent of the other, except that Owner may assign this Agreement to its lender or to an affiliate without Contractor’s consent upon written notice.
16.3 Entire Agreement. The Contract Documents constitute the entire agreement between the Parties and supersede all prior negotiations and understandings.
16.4 Amendments & Waivers. No amendment or waiver shall be effective unless in writing and signed by authorized representatives of both Parties. Waiver of any breach shall not constitute waiver of any other breach.
16.5 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the Parties shall negotiate a valid substitute provision consistent with the original intent.
16.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original. Signatures transmitted electronically (e.g., via PDF or DocuSign) are binding.
16.7 Notices. All notices shall be in writing and delivered (a) personally, (b) by certified mail, return receipt requested, or (c) by nationally recognized overnight courier, to the addresses set forth in the preamble (or as later changed by notice). Notices are deemed given on delivery or refusal.
16.8 No Third-Party Beneficiaries. Except as expressly provided in Section 11, nothing in this Agreement creates any duty to, or right in favor of, any third party.
16.9 Interpretation. Headings are for convenience only and do not affect interpretation. The terms “include,” “includes,” and “including” are deemed to be followed by “without limitation.”
16.10 Survival. Provisions that by their nature should survive termination, including Sections 4, 6, 7, 10–13, 15, and 16, shall survive Final Completion and any termination of this Agreement.
17. EXECUTION
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their duly authorized representatives 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: ____ |
[Seal, if applicable]
[Notary Acknowledgment, if required]
[// GUIDANCE: Attach the following exhibits as applicable.
• Exhibit A – Drawings, Specifications, and Project Manual
• Exhibit B – Project Schedule
• Exhibit C – Schedule of Values
• Exhibit D – Insurance Certificates
• Exhibit E – Payment Bond
• Exhibit F – Change Order Form]