CONSTRUCTION SERVICES AGREEMENT

(Pennsylvania – Private Project)

[// GUIDANCE: This template is intentionally drafted for private commercial projects located in the Commonwealth of Pennsylvania. If the work involves residential “home improvement” or a public project, additional statutory requirements (e.g., the Pennsylvania Home Improvement Consumer Protection Act or the Public Works Contractors’ Bond Law) will apply and must be incorporated before execution.]

I. DOCUMENT HEADER

This Construction Services Agreement (the “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

1. [OWNER LEGAL NAME], a [TYPE OF ENTITY & STATE OF ORGANIZATION], with a principal place of business at [ADDRESS] (“Owner”); and
2. [CONTRACTOR LEGAL NAME], a [TYPE OF ENTITY & STATE OF ORGANIZATION], with a 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 all labor, materials, equipment, and services necessary to complete the construction described herein (the “Project”) at [PROJECT LOCATION / ADDRESS] (the “Site”).
B. Contractor represents that it is duly licensed (where required), experienced, and qualified to perform the Work (as defined below).
C. In consideration of the mutual covenants herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

TABLE OF CONTENTS

1. Definitions
2. Scope of Work
3. Contract Price; Retainage; Payment Procedures
4. Time for Performance; Schedule; Delays
5. Site Conditions; Differing Site Conditions
6. Representations & Warranties
7. Covenants and Compliance Obligations
8. Changes in the Work
9. Lien Law Compliance
10. Insurance & Bonds
11. Indemnification; Limitation of Liability
12. Events of Default; Remedies
13. Suspension & Termination
14. Dispute Resolution
15. General Provisions
16. Execution Block

(Cross-references in this Agreement are to Sections unless otherwise noted.)

1. DEFINITIONS

The following terms, listed alphabetically, shall have the meanings set forth below (singular includes plural and vice versa):

“Applicable Law” – All federal, state, and local statutes, regulations, ordinances, and codes, including without limitation the Pennsylvania Mechanics’ Lien Law, 49 P.S. § 1101 et seq.; the Contractor and Subcontractor Payment Act (“CASPA”), 73 P.S. § 501 et seq.; and any building, safety, or environmental codes applicable to the Project.

“Change Order” – A written instrument executed by Owner and Contractor in accordance with Section 8 modifying the Scope of Work, Contract Price, Schedule, or other provisions.

“Contract Documents” – This Agreement, the drawings, specifications, schedules, exhibits, Change Orders, and any addenda incorporated herein by reference.

“Contract Price” – The total lump-sum or guaranteed maximum price of $[AMOUNT] payable to Contractor for performance of the Work, subject to adjustments in accordance with this Agreement.

“Force Majeure Event” – An event beyond the reasonable control of the affected Party, including but not limited to acts of God, acts of civil or military authority, terrorism, war, riots, labor disputes not directed at the affected Party, epidemics, or governmental actions that delay the Work.

“Retainage” – The portion of each progress payment withheld by Owner pursuant to Section 3.3.

“Schedule” – The baseline schedule for performance of the Work attached as Exhibit [__], as may be adjusted under this Agreement.

“Substantial Completion” – The date certified by Owner on which the Work, or a designated portion thereof, is sufficiently complete in accordance with the Contract Documents so that Owner may occupy or utilize the Work for its intended purpose, subject only to minor punch-list items.

“Work” – All construction and related services, labor, materials, equipment, and incidentals to be provided by Contractor as more fully described in Section 2 and the Contract Documents.

2. SCOPE OF WORK

2.1 Performance. Contractor shall furnish and perform, in a good and workmanlike manner, the Work described in Exhibit A (Scope of Work) in strict conformity with the Contract Documents and Applicable Law.

2.2 Standards. Contractor shall:
(a) Use new and good-quality materials;
(b) Employ skilled personnel and qualified subcontractors;
(c) Comply with manufacturer recommendations, all codes, and industry best practices; and
(d) Maintain the Site in a clean and safe condition.

2.3 Superintendent. Contractor shall assign a competent and authorized superintendent, [NAME], who shall be present on-Site during all critical phases and have authority to act on behalf of Contractor.

3. CONTRACT PRICE; RETAINAGE; PAYMENT PROCEDURES

3.1 Contract Price. Owner shall pay Contractor the Contract Price, as adjusted only by Change Orders executed in accordance with this Agreement.

3.2 Schedule of Values & Applications for Payment.
(a) Prior to the first Application for Payment, Contractor shall submit for Owner approval a schedule of values allocating the Contract Price among divisions of the Work.
(b) On or before the [DAY] of each month, Contractor shall submit an itemized Application for Payment for Work performed through the last day of the preceding month, supported by such documentation as Owner reasonably requests.

3.3 Retainage. Owner shall withhold retainage from each progress payment in an amount not to exceed ten percent (10%) of the value of Work properly completed, consistent with CASPA. Upon Substantial Completion, Owner shall release retainage within thirty (30) days, less:
(i) 150% of the reasonable value of punch-list items; and
(ii) Any amounts withheld for bona fide disputes in accordance with Section 12.

[// GUIDANCE: CASPA permits a maximum 10% retainage and mandates release within 30 days of Substantial Completion unless Owner provides written notice of deficiencies. 73 P.S. §§ 504, 512.]

3.4 Payment Due Date. Undisputed sums are due [NUMBER] days after Owner’s receipt of a properly submitted Application for Payment. Failure to pay timely shall bear interest at the lesser of [INTEREST RATE]% per annum or the maximum allowed by Applicable Law.

3.5 Conditional Waivers & Releases. As a condition precedent to payment, Contractor shall deliver executed conditional lien waivers from itself and each tier of subcontractor and supplier in the form attached as Exhibit B.

3.6 No Waiver of Claims. Acceptance of payment (including final payment) shall not constitute a waiver by Contractor of claims arising from hidden or latent defects, gross negligence, or Owner-caused delays discovered after such payment.

4. TIME FOR PERFORMANCE; SCHEDULE; DELAYS

4.1 Commencement & Completion. Contractor shall commence work on [START DATE] and achieve Substantial Completion no later than [SUBSTANTIAL COMPLETION DATE], subject to authorized extensions.

4.2 Excusable Delay. Contractor is entitled to a time extension (and, if applicable, compensation solely for direct cost impacts) for delays caused by (i) Owner, (ii) Force Majeure Events, or (iii) other causes beyond Contractor’s reasonable control, provided Contractor gives written notice within five (5) days after commencement of the delaying event.

4.3 Liquidated Damages. If Contractor fails to achieve Substantial Completion by the required date, Contractor shall pay Owner liquidated damages of $[AMOUNT] per day, representing a reasonable estimate of Owner’s actual damages and not a penalty.

[// GUIDANCE: Adjust liquidated damages to reflect documented anticipated losses; excessive amounts may be unenforceable.]

5. SITE CONDITIONS; DIFFERING SITE CONDITIONS

5.1 Site Access. Owner shall provide Contractor reasonable access to the Site and areas for staging, storage, and ingress/egress.

5.2 Differing Conditions. If Contractor encounters concealed or unknown site conditions materially differing from those indicated or ordinarily encountered, Contractor shall promptly (and in any event within 48 hours) notify Owner before disturbing such conditions. Contractor shall not be liable for delay or cost impacts arising from such conditions unless Contractor failed to exercise reasonable pre-construction due diligence.

6. REPRESENTATIONS & WARRANTIES

6.1 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 is authorized to do business in Pennsylvania;
(b) It holds all licenses, registrations, and permits required to perform the Work;
(c) The Work will be free from defects in workmanship and materials for a period of one (1) year from the date of Substantial Completion (the “Warranty Period”);
(d) All materials and equipment furnished are new, merchantable, and fit for their intended purposes; and
(e) It will comply with all Applicable Law, including OSHA, environmental laws, and immigration and employment verification requirements.

6.2 Survival. The warranties in this Section survive Substantial Completion and any termination of this Agreement.

7. COVENANTS AND COMPLIANCE OBLIGATIONS

7.1 Safety. Contractor shall implement and enforce a comprehensive safety program and comply with OSHA and all Site-specific safety rules.

7.2 Environmental Compliance. Contractor shall handle and dispose of hazardous materials generated by its operations in accordance with all Applicable Law and shall provide Owner with manifests and other documentation upon request.

7.3 Taxes. Contractor shall pay all sales, use, payroll, and other taxes imposed in connection with the Work, except taxes expressly stated as Owner’s responsibility in Exhibit A.

7.4 Notice Obligations. Contractor shall promptly provide written notice to Owner of any (i) accident causing bodily injury or property damage, (ii) claim from a subcontractor or supplier, or (iii) material violation of Applicable Law.

8. CHANGES IN THE WORK

8.1 Owner-Directed Changes. Owner may, without invalidating this Agreement, order changes in the Work by issuing a written Change Order.

8.2 Change Order Contents. Each Change Order shall set forth (a) a description of the change, (b) any adjustment to the Contract Price, (c) any adjustment to the Schedule, and (d) any other modifications to the Contract Documents.

8.3 Contractor-Requested Changes. Contractor shall not proceed with any change impacting Contract Price or Schedule without a fully executed Change Order. Failure to comply constitutes a waiver of Contractor’s right to a price or time adjustment.

9. LIEN LAW COMPLIANCE

9.1 Preliminary Notices. Contractor shall, within twenty (20) days after commencement of the Work, provide Owner with a written list of all known subcontractors and suppliers as required by 49 P.S. § 1402.

9.2 Affidavit & Releases. As a condition precedent to final payment, Contractor shall deliver (i) an affidavit stating that all subcontractors, laborers, and suppliers have been paid in full, and (ii) unconditional final lien waivers.

9.3 Owner’s Right to Withhold. If Owner receives notice of a potential lien claim, Owner may withhold from payments an amount sufficient to discharge such claim until Contractor furnishes adequate security or the claim is resolved.

9.4 Payment Bond Optional. Upon written request by Owner, Contractor shall furnish a payment bond in the penal sum of 100% of the Contract Price, naming Owner as obligee, issued by a Treasury-listed surety authorized to do business in Pennsylvania. The premium cost is [SELECT: Contractor/Owner] responsibility.

[// GUIDANCE: For private projects > $1.5M, Owners frequently require payment bonds even though not statutorily mandated.]

10. INSURANCE & BONDS

10.1 Insurance. Contractor shall maintain, at its own expense:
(a) Commercial General Liability: $[1,000,000] per occurrence / $[2,000,000] aggregate;
(b) Workers’ Compensation: statutory limits;
(c) Employer’s Liability: $[500,000] each accident;
(d) Commercial Automobile Liability: $[1,000,000] combined single limit;
(e) Builder’s Risk / Installation Floater: replacement cost of the Work, naming Owner as loss payee.

Certificates evidencing coverage shall be provided prior to commencement and require thirty (30) days’ advance notice of cancellation.

10.2 Performance Bond. If required by Exhibit C, Contractor shall furnish a performance bond in the penal sum of 100% of the Contract Price issued by a surety meeting the criteria in Section 9.4.

11. INDEMNIFICATION; LIMITATION OF LIABILITY

11.1 Contractor Indemnity. To the fullest extent permitted by law, Contractor shall indemnify, defend, and hold harmless Owner, its affiliates, and their respective officers, directors, employees, and agents from and against any and all claims, damages, losses, liabilities, fines, penalties, and expenses (including reasonable attorneys’ fees) arising out of or resulting from:
(a) bodily injury, sickness, disease, or death;
(b) property damage, including loss of use; or
(c) violations of Applicable Law,
but only to the extent caused by the negligent acts or omissions or willful misconduct of Contractor, its subcontractors, or anyone directly or indirectly employed by them.

11.2 Limitation of Liability. Except for (i) Contractor’s indemnification obligations, (ii) liability for bodily injury or death, or (iii) fraud or willful misconduct, Contractor’s aggregate liability to Owner under this Agreement shall not exceed the Contract Price. Neither Party shall be liable for consequential, special, or punitive damages, including lost profits, except to the extent such damages are recovered by a third party and included in the indemnified claims.

12. EVENTS OF DEFAULT; REMEDIES

12.1 Contractor Default. Each of the following constitutes a “Contractor Default”:
(a) Failure to prosecute the Work diligently so as to endanger timely completion and failure to cure within seven (7) days after written notice;
(b) Failure to pay subcontractors or suppliers when due, absent a bona fide dispute;
(c) Failure to maintain required insurance or bonds;
(d) Filing of voluntary or involuntary bankruptcy or insolvency proceeding;
(e) Material breach of any representation, warranty, or covenant not cured within ten (10) days after written notice.

12.2 Owner Remedies. Upon a Contractor Default, Owner may, after the applicable cure period:
(i) Suspend payments;
(ii) Supplement the workforce and back-charge Contractor;
(iii) Terminate for cause in accordance with Section 13.2; and/or
(iv) Pursue any other remedies at law or in equity, including specific performance and injunctive relief.

12.3 Owner Default. Owner is in default if it fails to make undisputed payments when due and does not cure within ten (10) days after written notice.

12.4 Contractor Remedies. Contractor may, upon Owner’s uncured default, suspend performance or terminate for cause under Section 13.3 and recover all amounts due plus reasonable demobilization costs.

12.5 Attorneys’ Fees. The prevailing Party in any dispute shall be entitled to recover reasonable attorneys’ fees and costs.

13. SUSPENSION & TERMINATION

13.1 Convenience. Owner may, for its convenience, suspend or terminate the Work in whole or in part by written notice. Contractor shall immediately stop work and protect the Work. In case of termination for convenience, Contractor is entitled to (i) payment for Work executed, (ii) reasonable termination expenses, and (iii) demobilization costs, but no lost profits on Work not performed.

13.2 Termination for Contractor Default. Following a Contractor Default and failure to cure, Owner may terminate for cause and finish the Work by whatever reasonable means Owner deems expedient. If the unpaid balance of the Contract Price exceeds the cost of finishing the Work, the excess shall be paid to Contractor. If such cost exceeds the unpaid balance, Contractor shall pay the difference to Owner.

13.3 Termination for Owner Default. If Owner fails to cure its default within the period stated in Section 12.3, Contractor may terminate and recover (i) the amount due for Work performed, (ii) reasonable overhead and profit on Work performed, and (iii) reasonable costs of termination.

14. DISPUTE RESOLUTION

14.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to its conflict-of-laws principles.

14.2 Forum Selection. The Court of Common Pleas of [COUNTY], Pennsylvania, or the United States District Court for the [MIDDLE/EASTERN/WESTERN] District of Pennsylvania, shall have exclusive jurisdiction and venue for any action not submitted to arbitration.

14.3 Optional Arbitration. At either Party’s election, disputes shall be submitted to binding arbitration administered by the American Arbitration Association (“AAA”) under its Construction Industry Arbitration Rules then in effect. The election must be made by written notice within thirty (30) days after service of a demand for litigation. Judgment on the award may be entered in any court of competent jurisdiction.

[// GUIDANCE: Delete Section 14.3 or mark “Intentionally Omitted” if the Parties do not want an arbitration option.]

14.4 Jury Trial Waiver. TO THE EXTENT PERMITTED BY LAW, EACH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.

14.5 Equitable Relief. Notwithstanding any other provision, either Party may seek temporary restraining orders, preliminary injunctions, or other equitable relief in any court of competent jurisdiction to prevent irreparable harm pending final resolution of the dispute.

15. GENERAL PROVISIONS

15.1 Amendment; Waiver. No amendment or waiver of any provision shall be effective unless in writing and signed by both Parties. A waiver of any breach shall not be deemed a waiver of any subsequent breach.

15.2 Assignment. Neither Party may assign or delegate its rights or obligations without the prior written consent of the other, except that Owner may assign to a lender providing financing for the Project upon written notice to Contractor.

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

15.4 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be deemed modified to the minimal extent necessary to render it enforceable.

15.5 Entire Agreement. The Contract Documents constitute the entire agreement between the Parties and supersede all prior negotiations, representations, or agreements, whether written or oral.

15.6 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which is deemed an original and all of which constitute one instrument. Signatures delivered electronically (e.g., via PDF or DocuSign) are binding to the same extent as original ink signatures.

16. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto 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: ______

[// GUIDANCE: Notarization is not generally required for enforceability in Pennsylvania private construction contracts, but may be advisable for recordable documents (e.g., lien waivers recorded with a county recorder). Add a notary acknowledgment if deemed necessary.]

EXHIBITS (Attach as Needed)

Exhibit A – Detailed Scope of Work & Specifications
Exhibit B – Form of Conditional/Unconditional Lien Waiver
Exhibit C – Performance & Payment Bond Forms (if required)
Exhibit D – Project Schedule
Exhibit E – Insurance Certificate Requirements