Construction Contract - Michigan

Michigan Private Construction Services Agreement

Use Gate — Complete Before Drafting

Do not use this agreement until counsel completes this gate.

Residential stop condition. For work within MCL 570.1114, counsel must confirm that the contract and later amendments are written, insert the statute's current required license statement in the required format, and coordinate Article 24 license disclosures. The Contractor must deliver the Owner the entire agreement, including all incidental finance and other charges, when MCL 339.2411(h) applies.

1. Parties, Project, and Contract Documents

This Construction Services Agreement (the “Agreement”) is effective [DATE] between:

• Owner: [LEGAL NAME], a [STATE/ENTITY TYPE], at [ADDRESS] (“Owner”); and
• Contractor: [LEGAL NAME], a [STATE/ENTITY TYPE], at [ADDRESS] (“Contractor”).

The project is [DESCRIPTION] at [ADDRESS AND LEGAL DESCRIPTION], [COUNTY] County, Michigan (the “Project”). The “Work” is the labor, services, supervision, materials, equipment, and closeout obligations described in the Contract Documents.

The Contract Documents, in order of precedence unless an exhibit states otherwise, are:

1. signed Change Orders;
2. this Agreement;
3. Exhibit A, Scope, Drawings, and Specifications;
4. Exhibit B, Price and Schedule of Values;
5. Exhibit C, Project Schedule;
6. Exhibit D, Insurance Requirements; and
7. [OTHER DOCUMENTS].

No bid term, purchase-order term, website term, or unsigned field directive modifies this Agreement.

2. Scope and Administration

2.1 Contractor Duties

Contractor shall perform the Work in accordance with the Contract Documents and applicable federal, Michigan, and local law; obtain the permits assigned to Contractor in Exhibit A; supervise its personnel and subcontractors; protect completed work and adjoining property; and keep the site reasonably clean and safe.

Contractor shall promptly notify Owner in writing of an apparent conflict, omission, concealed condition, or code issue before performing affected Work. Contractor is not responsible for the adequacy of design furnished by Owner unless Contractor expressly accepts design responsibility in Exhibit A.

2.2 Owner Duties

Owner shall provide lawful site access, timely selections and approvals, accurate information in Owner's possession, and the Owner-furnished items identified in Exhibit A. Owner designates [NAME/CONTACT] as Owner's representative. That representative may administer the Agreement but may not change price, time, scope, or material risk without a signed Change Order.

2.3 Subcontractors

Contractor remains responsible for its subcontractors' Work. Before starting, Contractor shall provide a list of principal subcontractors and suppliers. Owner's review does not create a contract between Owner and a subcontractor or relieve Contractor of responsibility.

3. Contract Price, Applications, and Payment

3.1 Price Method

Select and complete one:

☐ Lump sum: $[____].

☐ Cost plus fee: reimbursable Cost of the Work plus [____], subject to a guaranteed maximum of $[____]. Complete the cost, audit, allowance, contingency, and savings terms in Exhibit B.

☐ Unit price: the units and rates in Exhibit B, with quantities measured by [METHOD].

Taxes included/excluded: [____]. Allowances: [____]. Owner contingency: [____].

3.2 Applications for Payment

By the [DAY] of each month, Contractor shall submit an itemized application showing Work completed, stored materials if allowed, approved Change Orders, prior payments, Retainage, and the amount requested. Each application must include:

• an updated schedule of values and Project schedule;
• a sworn statement compliant with MCL 570.1110 when required by the statute or requested under the Contract Documents;
• conditional statutory lien waivers corresponding to the payment requested; and
• unconditional statutory lien waivers only for amounts actually received in cleared funds.

Owner shall approve or give a reasonably detailed written objection within [____] days after receiving a complete application. Owner shall pay the undisputed approved amount within [____] days after approval. These are negotiated private-project terms, not a statement of the public-agency payment or retainage rules.

3.3 Retainage

Owner may retain [____]% from each progress payment. Retainage shall reduce or cease when [MILESTONE], provided Contractor is not in material default. Owner shall release undisputed Retainage within [____] days after the conditions in Section 6 are met.

3.4 Withholding

Owner may withhold only a reasonable amount necessary to protect against documented defective Work, third-party claims, failure to pay subcontractors or suppliers, material schedule default, or another material breach. Owner shall identify the reason and calculation in writing and release the amount promptly after cure. Withholding does not authorize Owner to demand an advance or false lien waiver.

3.5 Construction Funds

Contractor acknowledges that project payments subject to the Michigan Building Contract Fund Act are trust funds under MCL 570.151. Contractor shall use and account for those funds consistently with MCL 570.151-.153 and shall not divert them while laborers, subcontractors, or material suppliers entitled to payment from those funds remain unpaid.

4. Time and Delay

Work shall commence on [DATE/CONDITION] and reach:

• Substantial Completion by [DATE]; and
• Final Completion by [DATE OR NUMBER OF DAYS AFTER SUBSTANTIAL COMPLETION].

Substantial Completion means the Work is sufficiently complete under the Contract Documents for Owner lawfully to occupy or use it for its intended purpose, subject to a punch list that does not materially interfere with that use.

Contractor shall provide an initial and monthly updated schedule. A party seeking additional time or money for delay, concealed conditions, material shortages, government orders, severe weather beyond the baseline in Exhibit C, labor disruption not caused by that party, or another event beyond its reasonable control must give written notice within [____] days after discovery. The notice must describe cause, expected effect, mitigation, and requested adjustment. No price adjustment is due unless stated in a signed Change Order.

Liquidated damages or early-completion incentive, if any: [NONE OR COMPLETE FORMULA AND SUPPORT IN EXHIBIT C].

5. Changes

Only a writing signed by authorized representatives of both parties may change scope, price, time, or another material term. Each Change Order must describe the changed Work and all known price and time effects.

If an emergency threatens persons or property, Contractor may take reasonable protective action and shall notify Owner promptly. If Owner directs disputed work before price or time is agreed, the parties shall sign an interim directive stating the method for tracking cost and reserving rights. Performance of an interim directive is not agreement on final adjustment.

6. Completion and Final Payment

6.1 Substantial Completion

When Contractor considers the Work substantially complete, it shall request inspection and submit a proposed punch list. The parties shall record the Substantial Completion date, remaining items, allocation of security/utilities/insurance, and time for completion.

6.2 Final Completion Conditions

Final payment and release of Retainage are conditioned on completion of the Work and delivery, as applicable, of:

• final inspection approvals and permit closeout;
• as-built documents, warranties, manuals, keys, and training;
• a final sworn statement under MCL 570.1110;
• statutory final unconditional lien waivers supported by received payment, or another attorney-approved lien-risk arrangement;
• consent of surety if a contractual bond requires it; and
• final accounting and other Exhibit A closeout items.

Acceptance or payment does not waive latent defects, fraud, or an express surviving warranty.

7. Construction Lien Administration

7.1 Notice of Commencement

The parties shall follow the route selected in the Use Gate. For a nonresidential improvement governed by MCL 570.1108, Owner shall prepare, record, post, and provide the notice of commencement as the statute requires. If MCL 570.1108a governs a residential improvement, the parties shall use that separate statutory route. Contractor shall provide information reasonably needed for the notice and preserve the posted copy.

7.2 Notices and Waivers

Each party remains responsible for its own statutory notices and deadlines. Waivers must be in substantial compliance with the forms and conditions in MCL 570.1115. A promise to waive lien rights before furnishing labor or material is not required by this Agreement. A conditional waiver accompanies a requested payment; an unconditional waiver is due only after the corresponding payment is actually received.

7.3 Lien Calendar — Do Not Treat as a Substitute for Counsel

The contract administrator shall maintain the actual dates, parties, service proofs, and county recording information in a separate lien calendar.

8. Licensing, Compliance, and Warranties

8.1 Licensing

Contractor represents only that it holds the licenses and registrations specifically listed below and will maintain those legally required for its assigned Work. The parties shall not assume every Michigan construction contractor has one general LARA license.

For residential-builder or residential-maintenance-and-alteration work, counsel shall verify MCL 339.2401 et seq., include the information required by MCL 339.2404a, and attach the complete written agreement required for the transaction.

8.2 Workmanship Warranty

Contractor warrants for [____] year(s) after Substantial Completion that its Work will conform to the Contract Documents and be free from material defects in workmanship and materials furnished by Contractor. Contractor shall begin correction within [____] days after written notice, subject to reasonable access. This express warranty does not shorten a nonwaivable statutory period or manufacturer warranty and excludes damage caused by abuse, unauthorized alteration, ordinary wear, or Owner's failure to maintain.

9. Safety, Insurance, and Bonds

Contractor controls construction means, methods, sequencing, and safety precautions for its Work, except design responsibilities expressly accepted in Exhibit A. Each party shall comply with law applicable to its own personnel and conduct.

Before starting, Contractor shall provide certificates and required endorsements for the insurance in Exhibit D. The parties shall identify who procures builder's-risk or installation-floater coverage and allocate deductibles and uncovered loss in Exhibit D.

☐ No payment or performance bond is required.

☐ Contractual bonds required: Contractor shall provide [PAYMENT/PERFORMANCE] bond(s) in the amount and form in Exhibit E. This private contractual requirement is not stated as compliance with Michigan's public-works payment-bond statute.

10. Indemnity and Liability Allocation

To the fullest extent permitted by law, Contractor shall indemnify and hold harmless Owner and [OTHER INDEMNITEES] from third-party claims for bodily injury, death, or property damage, but only to the extent caused by the negligent acts or omissions or willful misconduct of Contractor, its subcontractors, or persons for whom it is responsible. Contractor has no obligation to indemnify an indemnitee for liability caused by that indemnitee's sole negligence. This section shall be construed consistently with MCL 691.991.

Any defense obligation begins only to the extent permitted by Michigan law and is subject to prompt written notice and Contractor's right to control the defense with counsel reasonably acceptable to the indemnitee. No settlement may admit fault by or impose a nonmonetary obligation on an indemnitee without its consent.

Optional negotiated provisions—complete or delete after insurance review:

☐ Mutual waiver of consequential damages: [TEXT/EXCEPTIONS].

☐ Liability cap: [AMOUNT/FORMULA], excluding [INSURED CLAIMS, PAYMENT DUTIES, FRAUD, WILLFUL MISCONDUCT, LIEN/TRUST-FUND DUTIES, OR OTHER NEGOTIATED EXCEPTIONS].

11. Suspension, Default, and Termination

An event of default is a material failure to perform that continues for [____] days after reasonably detailed written notice, except an emergency or abandonment may justify shorter action permitted by law.

After an uncured Contractor default, Owner may withhold a reasonable protective amount, supplement the Work, or terminate for cause. After an uncured Owner payment or access default, Contractor may suspend affected Work after an additional [____]-day written suspension notice and may recover an equitable signed Change Order for resulting time and cost.

Owner may terminate for convenience on [____] days' notice. Owner shall pay for conforming Work performed, properly ordered noncancelable materials, reasonable demobilization, and [NEGOTIATED TERMINATION FEE OR “no anticipatory profit on unperformed Work”], less prior payments and documented offsets.

12. Dispute Resolution

The parties shall first confer through executives with settlement authority. If unresolved after [____] days, select one:

☐ Litigation in a Michigan court with subject-matter jurisdiction, subject to any mandatory venue for construction-lien foreclosure.

☐ Mediation followed by ☐ litigation ☐ binding arbitration under [RULES/ADMINISTRATOR], seated in [COUNTY], Michigan.

Governing law is Michigan law, without regard to conflict rules. Any jury waiver or prevailing-party fee clause must be separately reviewed and initialed:

☐ Jury waiver: [ATTORNEY-DRAFTED TEXT]. Owner initials: [____] Contractor initials: [____]

☐ Contract fee clause: [ATTORNEY-DRAFTED TEXT]. This clause does not restate the discretionary lien-foreclosure fee rule in MCL 570.1118.

Nothing prevents emergency relief from a court with jurisdiction. Counsel shall coordinate any arbitration clause with lien recording, foreclosure, joinder, bond, and limitations requirements.

13. General Terms

Neither party may assign this Agreement without the other's written consent, except Owner may assign it to a construction lender or successor owner that assumes Owner's duties in writing. Contractor may not subcontract the entire Work without Owner's consent.

Notices must be in writing and delivered by personal delivery, nationally recognized overnight service, certified mail, or confirmed email to the addresses below. Contract notices are effective [ON RECEIPT/OTHER RULE]. Statutory lien notices must use the method and timing required by the applicable statute, regardless of this contract clause.

This Agreement and its exhibits are the entire agreement. A waiver must be written and applies only to the stated instance. If a provision is unenforceable, the remaining terms continue to the extent permitted by law. Counterparts and electronic signatures may be used to the extent permitted by applicable law.

Owner notice address/email: [________________________________]

Contractor notice address/email: [________________________________]

14. Signatures

The parties acknowledge that all blanks and alternatives have been completed or struck before signing and that the attached exhibits form part of this Agreement.

Exhibits

• Exhibit A: Scope, Drawings, Specifications, permits, exclusions, Owner-furnished items, and design responsibility
• Exhibit B: Price, schedule of values, allowances, unit rates, reimbursable costs, fee, audit rights, and payment forms
• Exhibit C: Project schedule, milestones, baseline weather, delay documentation, and any liquidated-damages support
• Exhibit D: Insurance limits, endorsements, builder's risk, deductibles, and certificates
• Exhibit E: Contractual bond forms, if selected
• Exhibit F: Current statutory residential language and license disclosures, if applicable
• Exhibit G: Notice of commencement and lien-administration log

Attorney Verification Checklist

☐ Confirmed private ownership; removed all public-agency retainage and statutory payment-bond language.

☐ Classified the improvement under the current Construction Lien Act and selected MCL 570.1108 or 570.1108a.

☐ For residential work, complied with MCL 570.1114 and Article 24 of the Occupational Code, including the current required statement, written amendments, license information, and delivery of the complete agreement.

☐ Checked every contractor and trade license against the current official licensing source.

☐ Matched sworn statements to MCL 570.1110 and waivers to MCL 570.1115; did not demand an advance or unsupported unconditional waiver.

☐ Calendared the actual MCL 570.1111, 570.1117, and 570.1118 events rather than relying on this form.

☐ Reviewed payment administration under MCL 570.151-.153 and indemnity under MCL 691.991.

☐ Coordinated payment, retainage, insurance, bonds, termination, dispute resolution, and lien remedies with the actual delivery method and financing documents.

Sources and References

Official compilations reviewed August 8, 2026:

• Michigan Legislature, Construction Lien Act, 1980 P.A. 497, current through P.A. 20 of 2026 — https://www.legislature.mi.gov/documents/mcl/pdf/mcl-ACT-497-of-1980.pdf
• Michigan Legislature, Building Contract Fund Act, 1931 P.A. 259 — https://www.legislature.mi.gov/documents/mcl/pdf/mcl-ACT-259-of-1931.pdf
• Michigan Legislature, construction indemnity, 1966 P.A. 165 / MCL 691.991 — https://www.legislature.mi.gov/documents/mcl/pdf/mcl-ACT-165-of-1966.pdf
• Michigan Legislature, Occupational Code Article 24 — https://www.legislature.mi.gov/documents/mcl/pdf/mcl-299-1980-24.pdf
• Michigan Legislature, public-agency retainage, 1980 P.A. 524 (classification comparison only; not incorporated into this private agreement) — https://www.legislature.mi.gov/documents/mcl/pdf/mcl-ACT-524-of-1980.pdf

[END OF AGREEMENT]