Construction Contract - Minnesota

CONSTRUCTION SERVICES AGREEMENT

(Minnesota)

Before you use this: Identify whether the Project is public work or residential work. Complete the scope, materials, and performance-guidelines exhibits for a covered licensee; check public-work bonds and residential statutory warranties before signing.

TABLE OF CONTENTS

1. Document Header
2. Definitions

3. Operative Provisions
   3.1 Scope of Work
   3.2 Contract Documents Hierarchy
   3.3 Time for Performance & Schedule
   3.4 Contract Price & Payment Terms
   3.5 Retainage (MN-Specific)
   3.6 Change Orders & Claims
   3.7 Mechanics-Lien Compliance (MN-Specific Notice)
   3.8 Performance & Payment Bonds

4. Representations & Warranties

5. Covenants & Restrictions
6. Default & Remedies

7. Risk Allocation
   7.1 Indemnification
   7.2 Limitation of Liability
   7.3 Insurance Requirements
   7.4 Force Majeure

8. Dispute Resolution

9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

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

• [OWNER LEGAL NAME], [an individual / a [STATE] [ENTITY TYPE]], with an address at [ADDRESS] (“Owner”); and
• [CONTRACTOR LEGAL NAME], [an individual / a [STATE] [ENTITY TYPE]], with an address at [ADDRESS] (“Contractor”).

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

Recitals
A. Owner desires that Contractor furnish labor, materials, equipment, and services for the construction of [PROJECT DESCRIPTION] located at [PROJECT ADDRESS] (the “Project”) in accordance with the Contract Documents (defined below).
B. Contractor is duly qualified and willing to perform the Work (defined below) pursuant to the terms and conditions of this Agreement, which shall be governed by the laws of the State of Minnesota.

Project type: ☐ Private residential ☐ Private nonresidential ☐ Public work. If residential: ☐ New dwelling ☐ Home improvement.

NOW, THEREFORE, in consideration of the mutual promises herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

2. DEFINITIONS

For ease of reference, defined terms appear in bold italics throughout this Agreement.

“Change Order” – A written modification to the Contract Documents executed by Owner and Contractor in accordance with Section 3.6.
“Contract Documents” – Collectively, this Agreement; the plans, drawings, and specifications issued by [DESIGN PROFESSIONAL] dated [DATE]; approved Change Orders; and any addenda or exhibits expressly incorporated herein.
“Contract Price” – The total compensation payable to Contractor for full performance of the Work, being $[AMOUNT] subject to adjustments per the Contract Documents.
“Final Completion” – The date on which the Work is fully complete in accordance with the Contract Documents, free of defects, and acceptable to Owner, evidenced by Owner’s written approval.
“Retainage” – The portion of progress payments withheld pursuant to Section 3.5.
“Substantial Completion” – The date certified by Owner when the Work is sufficiently complete to enable Owner to occupy or utilize the Project for its intended purpose.
“Work” – All labor, services, materials, equipment, and other obligations required of Contractor by the Contract Documents to achieve Substantial and Final Completion.

3. OPERATIVE PROVISIONS

3.1 Scope of Work

Contractor shall diligently perform and complete the Work in accordance with the Contract Documents, employing qualified supervision and skilled labor, and complying with all applicable laws, codes, ordinances, and regulations. Exhibit A states the detailed services, drawings, and specifications; Exhibit B lists the specific materials or standard features. If Contractor is a licensee subject to Minn. Stat. § 326B.809, Exhibit C contains or incorporates the written performance guidelines furnished to Owner before signing. The Parties shall sign and date this Agreement and any covered change order, and Contractor shall give Owner a signed and dated copy at signing.

3.2 Contract Documents Hierarchy

In the event of a conflict, the following order of precedence applies: (a) properly executed Change Orders; (b) this Agreement; (c) written addenda issued prior to execution; (d) the drawings and specifications (newer revisions control over older); (e) Contractor’s proposal dated [DATE]; and (f) other documents incorporated by reference.

3.3 Time for Performance & Schedule

a. Commencement – Contractor shall commence the Work on [COMMENCEMENT DATE].
b. Substantial Completion – Contractor shall achieve Substantial Completion no later than [SUBSTANTIAL COMPLETION DATE].
c. Final Completion – Contractor shall achieve Final Completion within [NUMBER] calendar days after Substantial Completion.
d. Liquidated Damages (Optional) – If selected and enforceable under applicable law, Contractor shall pay Owner $[AMOUNT] per day of unexcused delay beyond the Substantial Completion date. ☐ Include ☐ Omit

3.4 Contract Price & Payment Terms

a. Progress Payments – Owner shall pay Contractor monthly based on the percentage of Work satisfactorily completed, less Retainage and authorized offsets.
b. Application for Payment – Contractor shall submit a notarized Application for Payment (AIA G702/G703 or equivalent) no later than the [DAY] of each month covering Work through the [CUT-OFF DATE].
c. Payment Timing – Owner shall pay approved amounts within [NUMBER] days after receipt of a complete, undisputed Application for Payment accompanied by: (i) payment-coordinated lien waivers under Section 3.7; (ii) sworn statement of Contractor; and (iii) other documentation reasonably required by Owner. No prepayment waiver is a condition to payment.
d. Final Payment – Owner shall pay the undisputed balance due for completed and invoiced Work under the agreed payment terms. Retainage shall be released under Section 3.5; Final Completion does not restart the statutory retainage clock.
e. Downstream Prompt Payment – Contractor shall pay each subcontractor or material supplier for undisputed services within ten days after receiving the corresponding payment, as required by Minn. Stat. § 337.10, subd. 3.

3.5 Retainage (Minnesota-Specific)

For a contract subject to Minn. Stat. § 337.10, subd. 4 (which excludes public agencies and contracts for professional services), the following provisions apply:

a. Rate – Owner may withhold Retainage not exceeding five percent (5%) of each progress payment, consistent with Minn. Stat. § 337.10, subd. 4.
b. Release – Owner shall release retainage no later than sixty (60) days after substantial completion as determined under Minn. Stat. § 337.10, subd. 4(c), subject only to the withholding limits and written statement required by subdivision 4(e). Owner shall not withhold retainage for warranty work. Amounts withheld for correction or completion and for final paperwork shall be released within the respective statutory periods.
c. Flow-Down – If Owner reduces retainage, Contractor shall reduce subcontractor retainage at the same rate. Contractor shall pay remaining retainage to each subcontractor within ten days after receiving it, except for a dispute about that subcontractor's work; Contractor shall pay unaffected subcontractors and give any affected subcontractor a written statement of the amount and reason withheld, as required by Minn. Stat. § 337.10, subd. 4(d).

3.6 Change Orders & Claims

No alteration to the Work or Contract Price is binding unless set forth in a Change Order executed by both Parties. Contractor waives any claim for extra compensation or time if not asserted in writing within [NUMBER] days after the event giving rise to the claim.

3.7 Mechanics-Lien Compliance (Minnesota)

a. Pre-Lien Notice – Prime Contractor. Where Minn. Stat. § 514.011, subd. 1 applies, Contractor shall give Owner a copy of this written contract containing the statutory notice in at least 10-point bold type. The notice appears above the signature blocks below.

b. Subcontractor & Supplier Notices. Where Minn. Stat. § 514.011, subd. 2 requires notice, each lien claimant not under direct contract with Owner must give the prescribed notice to Owner or Owner's authorized agent within 45 days after first furnishing labor, skill, or materials. Contractor shall give subcontractors and suppliers Owner's name and address within ten days after a request under subdivision 3 and shall require its subcontractors to address their own notice obligations.
c. Lien Waivers. Contractor shall obtain lien waivers from itself and applicable lower-tier claimants in coordination with payment. No provision of this Agreement requires a contractor, subcontractor, or supplier to waive lien or payment-bond rights before being paid for the labor or materials furnished; a contrary provision is void under Minn. Stat. § 337.10, subd. 2. Owner's withholding and discharge rights are governed by Minn. Stat. § 514.07.

3.8 Performance & Payment Bonds

a. Requirement – [SELECT ONE]

• ☐ Required. Contractor shall, within ten (10) days after the Effective Date, furnish separate performance and payment bonds each in the penal sum of 100% of the Contract Price, issued by a surety authorized to do business in Minnesota and rated A- or better by A.M. Best.
• ☐ Not Required.
  b. Statutory Compliance (Public Work) – For a contract with a public body to perform public work, the Parties shall determine whether Minn. Stat. § 574.26 requires performance and payment bonds, including the statutory contract-value threshold and exemptions. Where required, the bonds and their penalties must satisfy § 574.26 regardless of the selection above.

4. REPRESENTATIONS & WARRANTIES

4.1 Contractor represents and warrants that:
a. If an entity, it is duly organized, validly existing, and qualified to transact business in Minnesota where required.
b. It holds all licenses, registrations, and permits required for performance of the Work.
c. The Work will be performed in a good and workmanlike manner, free of defects, and in accordance with applicable codes, laws, and the Contract Documents.
d. Materials and equipment furnished shall be new and of good quality unless otherwise specified.
e. It has authority to supply the materials and equipment described in the Contract Documents and will address valid claims by its subcontractors and suppliers in accordance with the payment and lien provisions of this Agreement.

4.2 Owner represents and warrants that:
a. It has the lawful right to possess and improve the Project site.
b. It has obtained, or will obtain in a timely manner, all permits and approvals that are Owner’s responsibility under the Contract Documents.
c. Funds are available and committed to pay the Contract Price.

4.3 Warranty Period – Contractor's express workmanship and materials warranty under Section 4.1 applies for [NUMBER] year(s) beginning [DATE OR EVENT]. If the Project is a dwelling sale or covered home improvement, the statutory warranties in Minn. Stat. § 327A.02 apply according to their own scope and warranty dates. This Agreement does not waive or modify those warranties except through a separate instrument satisfying Minn. Stat. § 327A.04.

5. COVENANTS & RESTRICTIONS

5.1 Compliance with Laws – Each Party shall comply with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation OSHA, environmental, and lien laws.

5.2 Access & Cooperation – Owner shall provide Contractor reasonable access to the Project site and coordinate activities to avoid interference. Contractor shall cooperate with other trades and stakeholders.

5.3 Safety – Contractor shall initiate, maintain, and supervise safety precautions for its Work and personnel. Each Party retains its duties under applicable law.

5.4 Notice & Cure – A Party asserting a breach shall provide written notice describing the breach in reasonable detail. The breaching Party shall have [NUMBER] days (or such shorter period as reasonably necessary in an emergency) to cure before the asserting Party may exercise contractual remedies. This clause does not replace any mandatory statutory warranty claim procedure applicable to residential work.

6. DEFAULT & REMEDIES

6.1 Events of Default – Contractor
a. Failure to supply sufficient skilled workers or proper materials.
b. Failure to comply with lien-notice requirements causing a lien to be filed.
c. Failure to maintain required insurance or bonds.
d. Failure to prosecute the Work diligently, causing unreasonable delay.

6.2 Owner’s Remedies – Upon Contractor default and failure to cure within the period stated in Section 5.4, Owner may, subject to applicable payment and retainage requirements:
(i) supplement Contractor’s forces and deduct the cost;
(ii) withhold payment;
(iii) terminate for cause after the notice and cure period in Section 5.4; and/or
(iv) seek damages and any equitable relief available under applicable law.

6.3 Events of Default – Owner
a. Failure to make undisputed payments when due.
b. Failure to provide access or approvals causing delay.

6.4 Contractor’s Remedies – Upon Owner default and failure to cure under Section 5.4, Contractor may suspend performance or terminate this Agreement as permitted by law and seek recovery of unpaid sums, reasonable demobilization costs, interest at [PERCENT]% per annum where enforceable, and other damages allowed under law. Nothing here limits the suspension right of a prime contractor or subcontractor of any tier that has not received an undisputed downstream payment within ten days under Minn. Stat. § 337.10, subd. 3.

6.5 Attorney Fees – The prevailing Party in any action or proceeding arising out of this Agreement is entitled to recover reasonable attorney fees and costs.

7. RISK ALLOCATION

7.1 Indemnification (Contractor Indemnifies)

To the extent permitted by Minn. Stat. § 337.02, Contractor shall defend, indemnify, and hold harmless Owner, Owner’s lenders, and their respective officers, directors, employees, and agents (“Indemnitees”) against claims and liability for bodily injury or physical damage to property, including reasonable defense costs, only to the extent the injury or damage is attributable to a negligent or otherwise wrongful act or omission (including breach of a specific contractual duty) of Contractor or its independent contractors, agents, employees, or delegatees. This clause does not require Contractor to assume liability for an Indemnitee’s own acts or omissions beyond the extent § 337.02 permits.

7.2 Limitation of Liability

Except for (i) indemnity obligations under Section 7.1, (ii) liability for gross negligence or willful misconduct, (iii) unpaid Contract Price, and (iv) nonwaivable statutory warranties and remedies, Contractor’s total cumulative liability to Owner arising out of the Contract Documents shall not exceed the Contract Price to the extent enforceable under applicable law.

7.3 Insurance Requirements

Prior to commencing Work, Contractor shall provide certificates evidencing the following minimum insurance:

• Commercial General Liability: $[1,000,000] per occurrence / $[2,000,000] aggregate.
• Workers’ Compensation: Statutory limits, including Employer’s Liability at $[500,000].
• Commercial Auto Liability: $[1,000,000] combined single limit.
• Excess/Umbrella Liability: $[2,000,000] per occurrence.
• Builder’s Risk or Installation Floater: Replacement cost value of Work in place.

Contractor shall obtain additional-insured coverage for Owner on the commercial general liability policy for ongoing and completed operations, and on the commercial auto policy where available, with endorsements appropriate to the Project. The parties shall identify any required primary-and-noncontributory endorsements and insurer-issued cancellation-notice endorsements in an insurance schedule; Contractor shall give Owner prompt written notice if a required policy is canceled or materially reduced.

7.4 Force Majeure

Neither Party is liable for delays or failure to perform caused by events beyond its reasonable control, such as acts of God, acts of government, terrorism, epidemics, or labor strikes (“Force Majeure”). The affected Party shall provide written notice within five (5) days of the event. Schedule and compensation adjustments shall be determined via Change Order.

8. DISPUTE RESOLUTION

8.1 Governing Law – This Agreement is governed by the laws of the State of Minnesota without regard to conflict-of-laws principles.

8.2 Forum Selection – Subject to the arbitration selection in Section 8.3, any court proceeding arising out of this Agreement shall be brought in a court of competent jurisdiction in [COUNTY], Minnesota, to the extent permitted by applicable venue law.

8.3 Arbitration (Optional) – [SELECT ONE]

• ☐ The Parties shall resolve all disputes arising out of or relating to this Agreement by binding arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules. Judgment on the award may be entered in any court of competent jurisdiction.
• ☐ Arbitration is not selected.

8.4 Jury 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 this Agreement. ☐ Include ☐ Omit

8.5 Injunctive Relief – Either Party may seek temporary, preliminary, or permanent injunctive relief in a court of competent jurisdiction to prevent irreparable harm, in addition to any other remedies.

9. GENERAL PROVISIONS

9.1 Amendments & Waiver – No amendment or waiver is effective unless in writing and signed by the Party against whom enforcement is sought. A waiver on one occasion is not a waiver of any subsequent breach.

9.2 Assignment – Contractor shall not assign or delegate its rights or obligations without Owner’s prior written consent, except to a lending institution for the purpose of securing construction financing.

9.3 Successors & Assigns – This Agreement is binding upon and inures to the benefit of the Parties and their permitted successors and assigns.

9.4 Severability – Any provision held invalid is severed and the balance of the Agreement remains in full force if the essential terms and intent can still be effectuated.

9.5 Entire Agreement – The Contract Documents constitute the entire agreement between the Parties, superseding all prior negotiations, representations, or agreements, written or oral.

9.6 Counterparts; Electronic Signatures – This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. The Parties agree to accept signed electronic copies and electronic signatures for this Agreement to the extent permitted by applicable law.

9.7 Notices – All notices must be in writing and delivered (i) personally; (ii) by certified U.S. mail, return receipt requested; (iii) by nationally recognized overnight courier; or (iv) by email with confirmation of receipt to the addresses set forth below (or as later designated). Notice is effective upon receipt.

10. EXECUTION BLOCK

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

MINNESOTA MECHANICS-LIEN NOTICE (Minn. Stat. § 514.011, subd. 1):

(a) Any person or company supplying labor or materials for this improvement to your property may file a lien against your property if that person or company is not paid for the contributions.

(b) Under Minnesota law, you have the right to pay persons who supplied labor or materials for this improvement directly and deduct this amount from our contract price, or withhold the amounts due them from us until 120 days after completion of the improvement unless we give you a lien waiver signed by persons who supplied any labor or material for the improvement and who gave you timely notice.

OWNER:
[OWNER LEGAL NAME]
By: _______________________________
Name: _____________________________
Title: ______________________________
Date: ______________________________

CONTRACTOR:
[CONTRACTOR LEGAL NAME]
By: _______________________________
Name: _____________________________
Title: ______________________________
Date: ______________________________

☐ (SEAL) if required

EXHIBIT A — SCOPE AND SCHEDULE

Detailed services and deliverables: [DESCRIBE WORK, QUANTITIES, AND LOCATIONS]

Plans/specifications and revision dates: [LIST ATTACHED DOCUMENTS]

Milestones and completion criteria: [DESCRIBE]

EXHIBIT B — MATERIALS AND PRICE

Specific materials, models, or standard features: [LIST]

Contract Price or calculation basis: [AMOUNT OR FORMULA]

Allowances and exclusions: [LIST]

EXHIBIT C — PERFORMANCE GUIDELINES

Guidelines furnished to Owner before signing, and incorporated here: [INSERT GUIDELINES OR IDENTIFY ATTACHED DOCUMENT AND DATE]

Owner acknowledgment of receipt before signing: _______________________________ Date: [__/__/____]

© [YEAR] [LAW FIRM/CONSULTANT NAME]. All rights reserved. This template is provided for informational purposes only and does not constitute legal advice.