Construction Contract - North Dakota

CONSTRUCTION SERVICES AGREEMENT

(North Dakota – Private Project)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

1.1 Parties

This Construction Services Agreement (“Agreement”) is 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
• [CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE] having its principal place of business at [ADDRESS] (“Contractor”).

1.2 Recitals

A. Owner desires that certain improvements (the “Project”) be constructed on real property located at [PROJECT ADDRESS / LEGAL DESCRIPTION] (the “Site”).
B. Contractor represents that it is duly qualified and willing to perform the Work (as defined below) in accordance with the terms of this Agreement.
C. The parties intend for this Agreement to comply with all applicable North Dakota construction-lien, payment-bond, and retainage statutes, including, without limitation, N.D. Cent. Code ch. 35-27.

NOW, THEREFORE, in consideration of the mutual covenants herein, and other good and valuable consideration, the sufficiency of which is acknowledged, the parties agree as follows:

2. DEFINITIONS

For ease of reference, the following capitalized terms shall have the meanings set forth below. Defined terms used in plural shall include the singular and vice-versa where the context so requires.

“Application for Payment” – A written request, in AIA G702/G703 format or other form acceptable to Owner, for payment of the Contract Price or any portion thereof.

“Change Order” – A written modification to the Contract Documents executed by Owner and Contractor in accordance with Section 3.8.

“Completion” – The stage at which (i) the Work is Substantially Complete; (ii) all governmental approvals for occupancy or use have been issued; and (iii) all punch-list items have been remedied.

“Contract Documents” – Collectively, this Agreement, the Drawings and Specifications, any Change Orders, and the documents listed in Exhibit A.

“Contract Price” – The lump sum of [CONTRACT PRICE IN WORDS] Dollars (US $[AMOUNT]) payable to Contractor for performance of the Work, subject to adjustments under the Contract Documents.

“Day” – Calendar day unless expressly stated as “Business Day.”

“Lien Laws” – North Dakota construction lien statutes codified at N.D. Cent. Code ch. 35-27, as amended.

“Project Schedule” – The critical path schedule attached as Exhibit B, as may be adjusted by Change Order.

“Retainage” – The percentage of each Progress Payment withheld by Owner pursuant to Section 3.5.

“Site” – The real property identified in Recital A.

“Subcontractor” – A lower-tier contractor or supplier engaged directly or indirectly by Contractor to perform any portion of the Work.

“Substantial Completion” – The date certified by Owner when the Work is sufficiently complete, in accordance with the Contract Documents, so that Owner can occupy or utilize the Project for its intended use.

“Work” – All labor, materials, equipment, services, and other obligations required of Contractor under the Contract Documents.

3. OPERATIVE PROVISIONS

3.1 Scope of Work

Contractor shall furnish all supervision, labor, materials, tools, equipment, and services necessary to perform and complete the Work in strict conformity with the Contract Documents and applicable Laws.

3.2 Commencement & Time for Performance

(a) Commencement Date: Work shall commence on the later of (i) [COMMENCEMENT DATE] or (ii) issuance of all required permits.
(b) Substantial Completion: Contractor shall achieve Substantial Completion no later than [SUBSTANTIAL COMPLETION DATE], subject to permissible extensions under Section 7.4 (Force Majeure).
(c) Time is of the essence with respect to all dates and deadlines herein.

3.3 Contract Price & Consideration

Owner shall pay Contractor the Contract Price, as adjusted by Change Orders, in accordance with the payment provisions of this Section 3.

3.4 Schedule of Values & Applications for Payment

(a) Within ten (10) Days after the Effective Date, Contractor shall submit a detailed Schedule of Values allocating the Contract Price to discrete Work components.
(b) On or before the [DAY] of each month, Contractor shall submit an Application for Payment covering Work performed during the preceding period.

3.5 Progress Payments; Retainage

(a) Subject to Section 3.6, Owner shall make progress payments within thirty (30) Days after receipt of an undisputed Application for Payment.
(b) Retainage: Owner may withhold [RETAINAGE PERCENTAGE]% (no more than ten percent) of each estimate until the Project is fifty percent complete. No retainage shall be withheld from later estimates. Previously withheld retainage shall be reduced to [POST-SC RETAINAGE]% upon Substantial Completion and the balance released upon Final Completion, subject to Section 3.7(b). If Owner invests retained estimate funds, interest earned on those funds shall be paid to Contractor at final payment as required by N.D.C.C. § 43-07-23.

3.6 Payment Documentation; Lien Claims

(i) Contractor shall provide lien waivers for amounts previously paid, sworn statements, and other documents reasonably requested by Owner. Waivers for the current payment shall be delivered when that payment is made.
(ii) If a qualifying downstream lien claim arises for which Contractor is liable, Owner may withhold only the amount needed to meet that claim, as permitted by N.D.C.C. § 35-27-09, while paying any undisputed balance.
(iii) If Contractor claims a construction lien, Contractor shall comply with applicable Lien Laws, including written notice to the legal or equitable owner by certified mail at least ten days before recording under N.D.C.C. § 35-27-02(4).

3.7 Final Payment

(a) Contractor shall submit a final Application for Payment (“Final Application”) upon Completion.
(b) As a condition precedent to final payment, Contractor shall deliver: (1) final lien waivers for amounts paid; (2) as-built drawings; (3) all warranties; (4) evidence of cancellation of temporary insurance; and (5) a signed completion and inspection record for the Project.

3.8 Change Orders

(a) The Parties shall document changes to the Work, Contract Price, or time in a written Change Order signed by both Parties. An executed oral agreement may also alter a written contract under N.D.C.C. § 9-09-06; the Parties shall promptly document any such change.
(b) If Contractor encounters concealed conditions or material price escalation beyond its control, it shall notify Owner within two (2) Business Days, failing which Contractor waives any related adjustment.

3.9 Permits & Approvals

Except as listed in Exhibit C, Contractor shall obtain and pay for all permits, licenses, and inspections required for the Work.

3.10 Safety & Clean-Up

Contractor shall implement and enforce industry-standard safety measures, comply with OSHA requirements, and keep the Site free from accumulation of waste materials.

4. REPRESENTATIONS & WARRANTIES

4.1 Contractor represents and warrants to Owner that:
(a) It is duly organized, validly existing, and in good standing under the laws of its state of formation and is qualified to transact business in North Dakota;
(b) It holds all licenses and registrations required to perform the Work;
(c) The Work will be performed in a good and workmanlike manner, in accordance with the Contract Documents, applicable Laws, and professional standards;
(d) Materials furnished will be new and of good quality unless otherwise specified;
(e) The Work will be free from defects for one (1) year following Substantial Completion (“Warranty Period”) or such longer period as may be provided in the Contract Documents.

4.2 Survival. The warranties in this Article 4 shall survive expiration or termination of this Agreement to the extent provided by law.

5. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants of Contractor
(a) Compliance with Laws. Contractor shall comply with all federal, state, and local statutes, regulations, and ordinances applicable to the Work, including the Lien Laws.
(b) Insurance. Contractor shall maintain the insurance coverages and limits set forth in Exhibit D and shall furnish certificates evidencing such coverage prior to mobilization.
(c) Notice Obligations. Contractor shall provide prompt written notice of any event which may give rise to a lien, claim, or delay.

5.2 Negative Covenants
Contractor shall not:
(i) Assign any contract right or delegate any duty without Owner’s prior written consent, except to the extent of customary subcontracting;
(ii) Permit work stoppages that would jeopardize the Project Schedule;
(iii) File or permit filing of a lien for an amount already paid or waived, or otherwise contrary to applicable lien law.

6. DEFAULT & REMEDIES

6.1 Events of Default – Contractor

Any of the following constitutes a “Contractor Default”:
(a) Failure to prosecute the Work diligently or to adhere to the Project Schedule after notice and an opportunity to cure under Section 6.2;
(b) Knowingly filing or maintaining a construction lien contrary to applicable law or a valid signed waiver;
(c) Failure to maintain required insurance;
(d) Material inability to perform the Work or pay Subcontractors when due;
(e) Material breach of any representation, warranty, or covenant herein.

6.2 Owner Remedies

Upon Contractor Default, Owner shall give written notice describing the breach and at least ten (10) Days to cure. If the breach cannot reasonably be cured within that period, Contractor shall begin cure within the period and diligently complete it. If Contractor does not do so, Owner may, subject to applicable law and without prejudice to other remedies:
(i) Supplement or take over the Work and deduct reasonable, documented completion costs from unpaid amounts after an accounting;
(ii) Terminate this Agreement for cause;
(iii) Invoke the performance provisions of any bonds;
(iv) Seek specific performance, monetary damages, and/or injunctive relief.

6.3 Owner Default & Contractor Remedies

Owner’s failure to make undisputed payments within the period required constitutes an “Owner Default.” After ten (10) Days’ written notice and opportunity to cure, Contractor may suspend the Work or terminate this Agreement and recover unpaid amounts, reasonable demobilization costs, and direct damages.

6.4 Attorney Fees

In a dispute over performance of the Work, the prevailing party may recover reasonable attorney fees and costs to the extent this agreement and applicable law permit. This clause does not require an attorney-fee award for default in payment, debt collection, or foreclosure where N.D.C.C. § 28-26-04 makes such a provision void.

7. RISK ALLOCATION

7.1 Indemnification

Contractor shall, to the fullest extent permitted by law, indemnify, defend, and hold harmless Owner, Owner’s affiliates, and their respective directors, officers, employees, and agents (“Indemnitees”) from and against claims, damages, losses, liabilities, fines, penalties, and expenses (including reasonable attorney fees) to the extent caused by Contractor's or its Subcontractors' acts or omissions in performing the Work and arising out of:
(a) bodily injury, sickness, disease, or death of any person;
(b) damage to or loss of use of property; or
(c) breach of this Agreement or negligent act or omission of Contractor or its Subcontractors;
except to the extent caused by an Indemnitee's own negligence, fraud, willful injury, or violation of law, or by errors or omissions of Owner or Owner's agents in the plans and specifications (N.D.C.C. §§ 9-08-02, 9-08-02.1).

7.2 Mechanic’s Liens

(a) Contractor shall comply with the certified-mail notice requirement of N.D.C.C. § 35-27-02(4) if claiming a construction lien and shall obtain signed lien waivers from itself and its Subcontractors and suppliers for amounts paid (N.D.C.C. § 35-27-02(3)).
(b) If a lien for which Contractor is responsible is filed, Contractor shall, within five (5) Days after notice, begin steps to resolve the claim by payment or other means acceptable to Owner and diligently pursue resolution. If Owner qualifies to seek release by undertaking under N.D.C.C. ch. 35-21, Contractor shall cooperate with that process.

7.3 Limitation of Liability

EXCEPT FOR (i) INDEMNITY OBLIGATIONS UNDER SECTION 7.1, (ii) EITHER PARTY'S OWN FRAUD, WILLFUL INJURY, OR VIOLATION OF LAW, WHETHER WILLFUL OR NEGLIGENT, OR (iii) CONTRACTOR’S GROSS NEGLIGENCE, THE TOTAL AGGREGATE LIABILITY OF EITHER PARTY TO THE OTHER SHALL NOT EXCEED THE CONTRACT PRICE. This limit does not exempt either party from responsibility prohibited by N.D.C.C. § 9-08-02.

7.4 Force Majeure

Neither party shall be liable for delay or failure in performance caused by force majeure events beyond its reasonable control (e.g., acts of God, war, epidemics, governmental actions). The affected party shall give notice within three (3) Days after the occurrence and shall resume performance as soon as practicable. Schedule adjustments shall be by Change Order.

7.5 Payment Bond

[OPTIONAL] If required by Lender or applicable Law, Contractor shall furnish a payment bond in the amount of the Contract Price, issued by a surety licensed in North Dakota and acceptable to Owner.

8. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the laws of the State of North Dakota, without regard to its conflict-of-laws principles.

8.2 Forum Selection

Each party consents to the jurisdiction of the North Dakota state courts for disputes arising out of this Agreement. An action shall be filed in a court with jurisdiction and in a county where venue is proper under applicable law.

8.3 Mediation

As a condition precedent to litigation or arbitration, the parties shall participate in non-binding mediation administered by [MEDIATION PROVIDER] within thirty (30) Days after a written request for mediation.

8.4 Arbitration

[OPTIONAL – STRIKE IF NOT ELECTED] In lieu of litigation, any dispute not resolved through mediation may, upon mutual written agreement, be submitted to binding arbitration under the Construction Industry Arbitration Rules of the American Arbitration Association (“AAA”). The arbitration shall be conducted in [CITY], North Dakota before a panel of one (1) arbitrator with at least ten (10) years’ construction-law experience. Judgment on the award may be entered in any court of competent jurisdiction.

8.5 Jury Trial

Each party retains any right to trial by jury available under applicable law.

8.6 Injunctive Relief

Nothing herein shall prevent either party from seeking temporary, preliminary, or permanent injunctive relief in aid of its rights under this Agreement.

9. GENERAL PROVISIONS

9.1 Entire Agreement; Integration. The Contract Documents constitute the entire agreement between the parties and supersede all prior negotiations, representations, or agreements, written or oral.

9.2 Amendments & Waivers. The Parties intend amendments and waivers to be written and signed by the Party against whom enforcement is sought, subject to N.D.C.C. § 9-09-06 concerning an executed oral agreement. A waiver shall not constitute a waiver of any subsequent breach.

9.3 Assignment. Neither party may assign its rights or delegate its duties without the prior written consent of the other, except that Owner may assign its rights to a lender providing financing for the Project.

9.4 Severability. If a provision is held invalid or unenforceable, the remaining provisions shall remain effective to the extent they can operate independently. The parties may agree in writing to replace the affected provision with an enforceable provision that most closely reflects their intent.

9.5 Successors & Assigns. This Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original. By using electronic signatures, both parties agree to conduct this transaction by electronic means (N.D.C.C. § 9-16-04(2)). An electronic signature may not be denied legal effect solely because it is in electronic form (N.D.C.C. § 9-16-06).

9.7 Notices. All notices shall be in writing and delivered by (i) personal delivery, (ii) nationally recognized overnight courier, or (iii) certified U.S. mail, return-receipt requested, to the addresses set forth in Section 1.1. Notices are effective upon receipt or refusal.

9.8 Interpretation. Headings are for convenience only. “Including” means “including without limitation.” This Agreement shall not be construed against the drafter.

10. EXECUTION BLOCK

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

[Optional Notary Acknowledgment – include if project lender, title company, or recording office requires.]

EXHIBITS (List)

• Exhibit A – List of Contract Documents
• Exhibit B – Project Schedule
• Exhibit C – Permits/Approvals by Owner
• Exhibit D – Insurance Requirements

End of Document