CONSTRUCTION SERVICES AGREEMENT

(Minnesota – Lien-Compliant Template)

[// GUIDANCE: This template is intended for private commercial or residential projects governed by Minnesota law. If the Project involves public improvements for a Minnesota public entity, additional statutory requirements—most notably the mandatory payment and performance bond under Minn. Stat. § 574.26—must be incorporated. Consult counsel before finalization.]

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], a [STATE] [ENTITY TYPE], having its principal place of business at [ADDRESS] (“Owner”); and
• [CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE], having its principal place of business 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.

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.

[// GUIDANCE: Add or delete defined terms as needed to match the Project specifics. Ensure all capitalized terms are defined.]

3. OPERATIVE PROVISIONS

3.1 Scope of Work

Contractor shall diligently perform and complete the Work in strict accordance with the Contract Documents, employing qualified supervision and skilled labor, and complying with all applicable laws, codes, ordinances, and regulations.

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 Contractor fails to achieve Substantial Completion by the date specified, Contractor shall pay Owner $[AMOUNT] per day as liquidated damages, not as a penalty.

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) lien waivers per Section 3.7; (ii) sworn statement of Contractor; and (iii) other documentation reasonably required by Owner.
d. Final Payment – Subject to Section 6, Owner shall release retainage and any remaining Contract Price within the earlier of (i) 60 days after Final Completion, or (ii) such shorter period as required by Minn. Stat. § 337.10, subd. 4.

3.5 Retainage (Minnesota-Specific)

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 to Contractor within sixty (60) days after Substantial Completion, except amounts reasonably necessary to correct defective or incomplete Work as permitted by law.
c. Flow-Down – Contractor shall incorporate equivalent Retainage provisions in all subcontracts and shall release downstream retainage within ten (10) days after receiving corresponding retainage from Owner.

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. Pursuant to Minn. Stat. § 514.011, subd. 1, Contractor shall include the statutory mechanics-lien warning in this Agreement in at least 10-point bold type immediately above the signature lines.

[PLACEHOLDER: Insert verbatim statutory notice required by Minn. Stat. § 514.011, subd. 1(a).]

b. Subcontractor & Supplier Notices. Contractor shall ensure that each first-tier Subcontractor or Supplier timely serves the notice required by Minn. Stat. § 514.011, subd. 2, and shall indemnify Owner from any loss resulting from failure to do so.
c. Lien Waivers. As a condition precedent to payment, Contractor shall deliver conditional and, upon payment, unconditional lien waivers in a form compliant with Minn. Stat. § 514.07 from itself and all lower-tier entities.

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) – If the Project constitutes “public work” under Minn. Stat. § 574.26, Contractor shall provide bonds meeting or exceeding statutory requirements regardless of the selection above.

4. REPRESENTATIONS & WARRANTIES

4.1 Contractor represents and warrants that:
a. It is duly organized, validly existing, and in good standing under the laws of its state of formation and qualified to transact business in Minnesota.
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. Title to all Work, materials, and equipment passes to Owner free of liens and encumbrances upon incorporation into the Project or upon payment, whichever occurs earlier.

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 Survival – The warranties in this Section survive Final Completion for [ONE (1)] year or the period specified by law, whichever is longer.

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 is solely responsible for initiating, maintaining, and supervising all safety precautions and programs.

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 remedies.

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.
e. Bankruptcy, insolvency, or assignment for benefit of creditors.

6.2 Owner’s Remedies – Upon Contractor default and failure to cure within the period stated in Section 5.4, Owner may, without prejudice to other rights:
(i) supplement Contractor’s forces and deduct the cost;
(ii) withhold payment;
(iii) terminate for cause under Section 16; and/or
(iv) pursue damages at law or equity, including specific performance and injunctive relief.

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, Contractor may suspend performance, terminate under Section 16, and seek recovery of unpaid sums, reasonable demobilization costs, interest at [PERCENT]% per annum, and other damages allowed under law.

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)

Contractor shall defend, indemnify, and hold harmless Owner, Owner’s lenders, and their respective officers, directors, employees, and agents (“Indemnitees”) from and against any and all claims, damages, losses, liabilities, penalties, and expenses, including attorney fees, arising out of or resulting from (a) the negligent acts, errors, or omissions or willful misconduct of Contractor or its subcontractors; (b) violation of law; or (c) claims for bodily injury, death, or property damage to the extent caused by Contractor.

[// GUIDANCE: MN prohibits certain broad form indemnities on construction projects. Ensure this clause does not obligate Contractor to indemnify Indemnitees for their own negligence, consistent with Minn. Stat. § 337.02.]

7.2 Limitation of Liability

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

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.

All policies shall (a) name Owner as additional insured (CG 20 10 11/85 or equivalent for ongoing and completed operations), (b) be primary and non-contributory, and (c) provide 30 days’ prior written notice of cancellation.

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 – All litigation shall be commenced exclusively in the state courts located in [COUNTY], Minnesota.

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. Electronic signatures and transmissions (e.g., via PDF or DocuSign) are deemed original signatures for all purposes.

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.

OWNER:
[OWNER LEGAL NAME]
By: ____
Name: ____
Title: ____
Date: ______

CONTRACTOR:
[CONTRACTOR LEGAL NAME]
By: ____
Name: ____
Title: ____
Date: ______

[ ] (SEAL) if required

[// GUIDANCE: For Minnesota private projects, notarization is not typically required for enforceability, but may be advisable for lien-notice compliance or recording purposes. Confirm project-specific requirements.]

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