Construction Contract - Maryland

CONSTRUCTION SERVICES AGREEMENT

(Maryland – Private Nonresidential Project)

Before you use this: This form is for a private nonresidential project. Use a project-specific form for home-improvement, custom-home, or public work.

TABLE OF CONTENTS

1. Document Header
2. Definitions

3. Operative Provisions
   3.1 Scope of Work
   3.2 Contract Price & Payment Terms
   3.3 Schedule; Substantial & Final Completion
   3.4 Changes in the Work
   3.5 Conditions Precedent / Subsequent

4. Representations & Warranties

5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

CONSTRUCTION SERVICES AGREEMENT (this “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

(a) [OWNER LEGAL NAME], a [STATE] [TYPE OF ENTITY] with principal offices at [ADDRESS] (“Owner”)

and

(b) [CONTRACTOR LEGAL NAME], a [STATE] [TYPE OF ENTITY] with principal offices at [ADDRESS] (“Contractor”). Licenses or registrations required for this Work: [TYPE AND NUMBER / NONE].

Owner and Contractor are sometimes referred to individually as a “Party” and collectively as the “Parties.”

Recitals

A. Owner desires to engage Contractor to furnish all labor, materials, equipment, and services necessary to construct the Project (as defined below) on the real property located at [PROJECT ADDRESS] in the State of Maryland.
B. Contractor represents that it holds the licenses and registrations required for the Work and is experienced and qualified to perform the Work (as defined below) in accordance with applicable laws, regulations, and industry standards.
C. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.

2. DEFINITIONS

For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below; terms defined in the body of the Agreement shall have the same meaning throughout.

“Actual Cost” – Contractor’s verifiable cost of performing the Work, including labor, materials, equipment, and approved Subcontractor charges, exclusive of overhead and profit.

“Change Order” – A written, fully executed amendment modifying the Contract Price, the Contract Time, or the Scope of Work.

“Contract Documents” – (i) this Agreement, (ii) the Drawings and Specifications dated [DATE] prepared by [ARCHITECT/ENGINEER], (iii) any Addenda issued prior to execution, (iv) all approved Change Orders, and (v) the Project Schedule.

“Contract Price” – The lump-sum amount of $[AMOUNT] (subject to adjustments via Change Orders) payable to Contractor for full performance of the Work.

“Contract Time” – The period commencing on the Notice to Proceed and expiring upon Final Completion, inclusive of interim milestones and any permitted extensions.

“Force Majeure Event” – An event beyond the reasonable control of the affected Party, including acts of God, governmental orders, pandemics, labor disputes (excluding those of the affected Party’s employees or Subcontractors), and material shortages not attributable to the affected Party.

“Lien Law” – The Maryland mechanics’ lien law applicable to the Project and the particular claim.

“Notice of Intent to Lien” – The written notice to Owner required of a Subcontractor, including a qualifying Supplier, under Md. Code, Real Prop. § 9-104 when that section applies.

“Project” – The construction of [SHORT DESCRIPTION OF PROJECT] located at [PROJECT ADDRESS] in accordance with the Contract Documents.

“Project Schedule” – The detailed construction schedule prepared by Contractor and approved by Owner pursuant to Section 3.3.

“Retainage” – The portion of progress payments withheld by Owner pursuant to Section 3.2.4, not to exceed five percent (5%) of any progress payment.

“Subcontractor” – Any person or entity, of any tier, retained by Contractor to supply labor, materials, or services in connection with the Work.

“Substantial Completion” – The stage when the Work (or a designated portion thereof) is sufficiently complete so that Owner can occupy or use the Project for its intended purpose, subject only to punch-list items that do not materially impair such use.

“Supplier” – A person or entity providing only materials, equipment, or supplies to the Project.

“Work” – All obligations, services, and deliverables to be performed or furnished by Contractor under the Contract Documents, including all labor, materials, equipment, and supervision necessary for the proper execution and completion of the Project.

3. OPERATIVE PROVISIONS

3.1 Scope of Work

3.1.1 Contractor shall diligently perform the Work in strict accordance with the Contract Documents and all applicable laws, codes, and regulations.
3.1.2 Contractor shall provide competent, suitably qualified personnel; shall maintain effective safety programs; and shall be solely responsible for the means, methods, techniques, sequences, and procedures of construction.

3.2 Contract Price & Payment Terms

3.2.1 Owner shall pay Contractor the Contract Price for satisfactory completion of the Work, subject to additions and deductions as provided herein.
3.2.2 Progress Payments. Contractor shall submit itemized Applications for Payment on the agreed dates or milestones: [INSERT SCHEDULE]. Owner shall pay undisputed amounts within the time required by Md. Code, Real Prop. § 9-302 when it applies, and otherwise by [AGREED PAYMENT DATE]. Any lien waiver requested with an application shall be conditioned on receipt of the corresponding payment.
3.2.3 Lien Notices. Contractor shall promptly provide Owner copies of lien notices Contractor receives and shall cooperate in identifying the affected work and payment status. Nothing in this Agreement waives a Subcontractor's statutory notice or lien rights.
3.2.4 Retainage. Owner may withhold no more than five percent (5%) from each progress payment under this Agreement. Upon Substantial Completion, Retainage shall be reduced to two-and-one-half percent (2.5%) of then-earned amounts. Owner shall pay undisputed retained sums at Final Completion or, when Md. Code, Real Prop. § 9-304 applies, no later than 90 days after Substantial Completion, whichever is earlier. Any additional withholding must have the grounds permitted by applicable law.
3.2.5 Final Payment. Contractor shall submit a final itemized application at Final Completion with required warranties and closeout documents. Owner shall pay undisputed amounts by the applicable § 9-302 deadline or, if that section does not apply, within thirty (30) days after Final Completion. A final lien waiver may be exchanged for payment and shall not be required unconditionally before payment.

3.3 Schedule; Substantial & Final Completion

3.3.1 Contractor shall prepare and submit a critical-path Project Schedule within ten (10) days after the Effective Date.
3.3.2 Time is of the essence. Contractor shall achieve Substantial Completion on or before [SUBSTANTIAL COMPLETION DATE] and Final Completion no later than [FINAL COMPLETION DATE], subject to approved extensions for excusable delay.
3.3.3 Liquidated Damages (Optional). ☐ Omitted. ☐ For unexcused delay beyond the Substantial Completion date, Contractor shall pay $[AMOUNT] per day. The Parties shall document the basis for the amount and obtain counsel's review of its enforceability for this Project.

3.4 Changes in the Work

No change, addition, or deletion shall be effective without a written Change Order executed by both Parties. Pending resolution of any disputed Change Order, Contractor shall proceed with the Work as directed in writing by Owner.

3.5 Conditions Precedent / Subsequent

3.5.1 Payment Bond (select one). ☐ No bond is required by this Agreement. ☐ Contractor shall deliver a payment bond of $[AMOUNT] from a surety acceptable to Owner by [DATE]. This contractual selection does not replace any bond required for the actual project by other law or financing terms.
3.5.2 Insurance. Contractor shall maintain, at its sole expense, insurance coverage at not less than the following limits:
(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) Builders’ Risk (special form, completed value).

Owner shall be named as an additional insured on policies (a) and (d).

4. REPRESENTATIONS & WARRANTIES

4.1 Mutual Reps. Each Party represents that it has full power and authority to enter into and perform this Agreement.

4.2 Contractor Reps. Contractor additionally represents and warrants that:
(a) it is properly licensed and in good standing in all jurisdictions where the Work is to be performed;
(b) it and its Subcontractors possess the requisite skill, expertise, personnel, and equipment to perform the Work in a timely and workmanlike manner;
(c) all materials furnished shall be new and of good quality unless otherwise specified;
(d) the Work will be free from defects in workmanship and materials for a period of one (1) year from Final Completion or for such longer period as may be prescribed by the Contract Documents or manufacturer warranties;
(e) it shall comply with all applicable federal, state, and local laws, including without limitation safety, environmental, wage, and lien laws.

4.3 Survival. The warranties in this Article IV shall survive Final Payment and completion of the Work.

5. COVENANTS & RESTRICTIONS

5.1 Permits & Approvals. Contractor shall obtain and pay for all permits, inspections, and fees required for the lawful performance of the Work.

5.2 Compliance With Laws. Contractor covenants to comply with all laws, ordinances, rules, regulations, and orders of any public authority bearing on the performance of the Work.

5.3 Safety. Contractor shall be solely responsible for initiating, maintaining, and supervising all safety precautions and programs in connection with the Work.

5.4 Records & Audit Rights. Contractor shall keep detailed and accurate books and records relating to the Work for a period of not less than three (3) years after Final Completion and shall make such records available for Owner’s review upon reasonable notice.

5.5 Notice of Claims. Contractor shall provide Owner with written notice of a contractual claim or dispute within five (5) days after Contractor becomes aware of it. This contractual notice term does not waive any person's statutory mechanics’ lien notice or filing rights.

6. DEFAULT & REMEDIES

6.1 Contractor Default. The following constitute events of default by Contractor:
(a) failure to prosecute the Work diligently or to maintain adequate progress;
(b) failure to supply sufficient skilled workers or proper materials;
(c) failure to pay Subcontractors or Suppliers when due, absent a good-faith dispute;
(d) violation of any material covenant, representation, or warranty; or
(e) failure to perform a material obligation after the applicable notice and cure period.

6.2 Owner Remedies. Upon the occurrence of a Contractor default, Owner may, after three (3) days’ written notice and an additional seven (7) day cure period (if curable):
(a) suspend all or any portion of the Work;
(b) supplement Contractor’s forces and back-charge Contractor for associated costs;
(c) withhold disputed sums reasonably related to the default to the extent permitted by law, while paying undisputed sums when due;
(d) terminate this Agreement for cause and finish the Work by whatever reasonable means Owner deems expedient; and/or
(e) pursue remedies available under this Agreement or applicable law; attorney fees are recoverable only if authorized by this Agreement or law.

6.3 Owner Default. Contractor may terminate this Agreement if Owner fails to make an undisputed payment due hereunder within twenty-one (21) days after receiving written notice of such failure and an opportunity to cure.

6.4 Termination for Convenience. Owner may, at any time, terminate this Agreement for convenience upon seven (7) days’ prior written notice to Contractor. In such event, Owner shall pay Contractor for (i) Work properly performed to the termination date, (ii) proven costs of materials suitably stored on or off site, and (iii) reasonable demobilization costs, but shall have no liability for anticipated profit on unperformed Work.

7. RISK ALLOCATION

7.1 Indemnification

Contractor shall indemnify Owner for third-party bodily-injury or property-damage claims to the extent caused by negligent acts or omissions of Contractor or its Subcontractors in performing the Work. Contractor shall not indemnify, defend, or pay defense costs for liability caused solely by Owner or another indemnitee, as provided in Md. Code, Cts. & Jud. Proc. § 5-401(a). Defense obligations for mixed-fault claims, if any, are [INSERT NEGOTIATED ALLOCATION CONSISTENT WITH APPLICABLE LAW].

7.2 Limitation of Liability

☐ No contractual liability cap is selected. ☐ Subject to counsel's review of the Project's insurance, financing, and risk allocation, Contractor's aggregate liability to Owner under this Agreement shall not exceed $[NEGOTIATED CAP], except for [SPECIFY EXCLUDED CLAIMS]. The selected cap applies only to the extent permitted by law.

7.3 Insurance; Waiver of Subrogation

Each Party waives all rights against the other for losses covered by property insurance applicable to the Project. Policies shall contain endorsements evidencing such waiver of subrogation.

7.4 Force Majeure

A Party delayed in the performance of any obligation by a Force Majeure Event shall provide written notice within seven (7) days after the start of the event. The Contract Time shall be extended by the period of actual delay, and the Contract Price shall be equitably adjusted only for cost impacts demonstrably beyond Contractor’s control.

8. DISPUTE RESOLUTION

8.1 Governing Law. The Parties select Maryland law, subject to any mandatory choice-of-law rule applicable to the dispute.

8.2 Forum Selection. Subject to mandatory jurisdiction and venue rules and any arbitration selected in Section 8.3, the Parties consent to the state courts located in [COUNTY], Maryland for disputes arising from this Agreement.

8.3 Arbitration (Optional). [ARBITRATION: ☐ Included ☐ Omitted]
If “Included” is checked, a dispute not resolved by negotiation within thirty (30) days shall be submitted to binding arbitration administered by [ADMINISTRATOR] under [IDENTIFIED RULES]. The arbitration shall take place in [CITY, MD] before [NUMBER] arbitrator(s). Review, correction, confirmation, and enforcement of an award remain subject to applicable law.

8.4 Jury Trial. ☐ No contractual jury waiver. ☐ A separate jury-waiver addendum reviewed by counsel is attached and initialed by both Parties. This Agreement alone does not waive a jury trial.

8.5 Injunctive Relief. Notwithstanding any other provision, a Party may seek temporary, preliminary, or permanent injunctive relief in any court of competent jurisdiction to protect its intellectual property rights, confidential information, or lien rights.

9. GENERAL PROVISIONS

9.1 Amendment; Waiver. No amendment or waiver of any provision shall be effective unless in writing and signed by the Parties. A waiver on one occasion shall not constitute a waiver on any subsequent occasion.

9.2 Assignment. Neither Party may assign or delegate its rights or obligations without the prior written consent of the other, except that Owner may assign this Agreement to its lender or any successor in interest without Contractor’s consent.

9.3 Successors & Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

9.4 Severability. If a provision is held unenforceable, the remaining provisions continue to the extent the transaction can operate without it. Any replacement or modification requires Party agreement or tribunal authority.

9.5 Integration. This Agreement, together with the other Contract Documents, constitutes the entire agreement between the Parties and supersedes all prior negotiations, understandings, and agreements.

9.6 Counterparts; Electronic Signatures. The Parties may sign counterparts that together form one instrument. Electronic signatures may be used when effective for this transaction under applicable law and any required signing process.

9.7 Contract Notices. Notices under this Agreement shall be in writing and delivered personally, by nationally recognized overnight courier, or by certified or registered United States mail, return receipt requested, to the receiving Party's address above or a replacement address designated in writing. A contractual notice is effective on [RECEIPT / OTHER AGREED EVENT]. This section does not govern a statutory mechanics' lien notice or filing. A claimant must use the method, recipient, content, and deadline required by Md. Code, Real Prop. § 9-104 or other applicable lien law; § 9-104(c) specifies registered or certified mail with return receipt requested, or personal delivery to the owner by the claimant or the claimant's agent, subject to the statute's other provisions.

9.8 Confidentiality. Contractor shall keep confidential and shall not disclose to any third party any proprietary or confidential information obtained from Owner in connection with the Project, except as required for performance of the Work or by law.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Construction Services Agreement as of the Effective Date.

OWNER:
[OWNER LEGAL NAME]

By: ________________________________
Name: ______________________________
Title: _______________________________
Date: _______________________________

CONTRACTOR:
[CONTRACTOR LEGAL NAME]

By: ________________________________
Name: ______________________________
Title: _______________________________
Date: _______________________________

[Corporate Seal if applicable]

END OF DOCUMENT