CONSTRUCTION SERVICES AGREEMENT
(South Dakota – Lien-Compliant)
[// GUIDANCE: This is a comprehensive, court-ready template drafted to satisfy South Dakota (“SD”) construction-law requirements, including lien notices, payment bond rules, and statutory retainage limits. All bracketed items must be completed or modified by counsel before use. Remove guidance comments prior to execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Scope of Work
- Contract Price; Payment; Retainage
- Schedule; Delays; Force Majeure
- Contractor Responsibilities
- Owner Responsibilities
- Changes in the Work
- Lien Compliance & Waivers
- Representations & Warranties
- Insurance & Bonds
- Indemnification; Limitation of Liability
- Default; Remedies
- Termination
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
CONSTRUCTION SERVICES AGREEMENT (this “Agreement”) is entered into as of [Effective Date] (the “Effective Date”) by and between:
- [Owner Legal Name], a [State & Entity Type] (“Owner”), having its principal place of business at [Address]; and
- [Contractor Legal Name], a [State & Entity Type] (“Contractor”), having its principal place of business at [Address].
Owner and Contractor are each a “Party” and collectively the “Parties.”
Recitals
A. Owner desires to engage Contractor to perform certain construction services described herein (the “Project”) at [Project Address / Legal Description] (the “Site”).
B. Contractor possesses the requisite skill, experience, personnel, and licenses to perform the Work (defined below).
C. The Parties enter into this Agreement in consideration of the mutual promises and covenants set forth herein.
NOW, THEREFORE, the Parties agree as follows:
2. DEFINITIONS
For purposes of this Agreement, the following capitalized terms have the meanings set forth below. Any term used but not defined shall be interpreted in accordance with customary construction-industry usage in South Dakota.
“Change Order” – A written instrument, executed by duly authorized representatives of both Parties, modifying the Work, Contract Price, or Contract Time.
“Contract Documents” – This Agreement, the drawings and specifications listed in Exhibit A, all approved Change Orders, and any other documents expressly incorporated herein.
“Contract Price” – The total compensation payable to Contractor for performance of the Work, as specified in Section 4.1, subject to adjustments made in accordance with this Agreement.
“Contract Time” – The period commencing on the Notice to Proceed and ending upon Substantial Completion, as adjusted under this Agreement.
“Lien Laws” – All applicable SD mechanics’/materialmen’s lien statutes, including notice, waiver, and release requirements.
“Notice to Proceed” – Written authorization issued by Owner directing Contractor to commence the Work.
“Retainage” – The portion of each payment withheld by Owner pursuant to Section 4.4.
“Substantial Completion” – The stage in the progress of the Work when the Project 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.
[// GUIDANCE: Modify or add definitions as project complexity demands. Ensure defined terms are capitalized consistently throughout.]
3. SCOPE OF WORK
3.1 Performance. Contractor shall diligently and continuously perform the Work in accordance with the Contract Documents, applicable laws, codes, regulations, and industry standards.
3.2 Standard of Care. Contractor shall perform the Work (a) in a good and workmanlike manner, (b) using new and first-class materials, and (c) in compliance with all permits, approvals, and licenses.
3.3 Superintendent. Contractor shall assign a competent on-Site superintendent acceptable to Owner (not to be unreasonably withheld).
3.4 Subcontractors. Contractor may subcontract portions of the Work only with Owner’s prior written consent, which shall not relieve Contractor of any responsibility or liability.
4. CONTRACT PRICE; PAYMENT; RETAINAGE
4.1 Contract Price. Owner shall pay Contractor the fixed sum of [Dollar Amount] (the “Contract Price”), subject to additions and deductions by Change Order.
4.2 Schedule of Values & Applications for Payment. Contractor shall submit a schedule of values (approved by Owner) and monthly Applications for Payment using [AIA G702/G703 or alternative].
4.3 Progress Payments. Within [___] days after Owner’s receipt of an undisputed Application for Payment, Owner shall pay [___]% of the approved amount, less Retainage.
4.4 Retainage. Owner shall withhold retainage in an amount not exceeding [10%] of each progress payment until the Work is 50% complete. Thereafter, provided Contractor remains on schedule and in compliance, retainage shall be reduced to [5%]. Retained funds shall be released within [30] days after (a) Substantial Completion and (b) Contractor’s delivery of final lien waivers and close-out documents.
[// GUIDANCE: SD public-works retainage is capped by statute; private projects commonly follow similar limits. Confirm current statutory maximums before finalizing.]
4.5 Conditional & Unconditional Lien Waivers. As a condition precedent to each payment, Contractor shall provide conditional lien waivers from itself and all lower-tier subcontractors/suppliers for the amount covered by the pending Application. Upon receipt of payment, Contractor shall furnish corresponding unconditional waivers.
4.6 Right to Withhold. Owner may withhold sums otherwise due to protect against claims, liens, defective Work, or Contractor default; such withholding shall be reasonable and documented.
4.7 Final Payment. Final payment is conditioned upon (a) Final Completion, (b) delivery of all close-out documentation, (c) satisfaction of lien-release requirements in Section 9, and (d) Contractor’s certification that payroll taxes and all subcontractors/suppliers have been paid in full.
5. SCHEDULE; DELAYS; FORCE MAJEURE
5.1 Contract Time. Contractor shall achieve Substantial Completion no later than [Date Certain] (“Substantial Completion Date”). Final Completion shall occur within [___] days thereafter.
5.2 Progress Schedule. Within [10] days after the Effective Date, Contractor shall submit a detailed CPM schedule for Owner’s review.
5.3 Delays. If Contractor is delayed by force majeure, Owner-caused events, or other excusable causes beyond Contractor’s control, the Contract Time shall be equitably extended by Change Order.
5.4 Liquidated Damages. If Substantial Completion is not achieved by the Substantial Completion Date (as extended), Contractor shall pay Owner liquidated damages of [$/day], representing a reasonable pre-estimate of Owner’s damages and not a penalty.
5.5 Force Majeure. Neither Party shall be liable for delays caused by events beyond its reasonable control, including natural disasters, acts of terrorism, epidemics, or governmental orders, provided the affected Party gives prompt written notice and mitigates to the extent reasonably practicable.
6. CONTRACTOR RESPONSIBILITIES
6.1 Safety & Clean-Up. Contractor shall maintain the Site in a safe, orderly condition and comply with all OSHA and state safety regulations.
6.2 Permits. Unless otherwise stated in Exhibit B, Contractor shall obtain and pay for all permits, inspections, and fees necessary for the lawful execution of the Work.
6.3 Environmental & Hazardous Materials. Contractor shall promptly notify Owner of any suspected hazardous materials encountered on-Site and suspend affected Work until Owner issues written instructions.
6.4 Warranty of Work. Contractor warrants that the Work will be free from defects for [12] months following Substantial Completion. Owner shall give written notice of any defects; Contractor shall correct defects promptly at its sole cost.
7. OWNER RESPONSIBILITIES
7.1 Access & Information. Owner shall provide reasonable Site access, timely decisions, and all information reasonably necessary for Contractor to perform the Work.
7.2 Payments. Owner shall make payments in accordance with Section 4.
7.3 Separate Contractors. Owner reserves the right to perform work at the Site with separate contractors. Contractor shall coordinate and not impede such work.
8. CHANGES IN THE WORK
8.1 Owner-Initiated Changes. Owner may order changes, additions, or deletions by written Change Order.
8.2 Contractor-Initiated Changes. Contractor shall not proceed with any change without Owner’s prior written approval.
8.3 Pricing of Changes. Adjustments to the Contract Price shall be determined by (a) mutually agreed lump sum, (b) unit prices, or (c) time-and-material rates with agreed mark-ups.
9. LIEN COMPLIANCE & WAIVERS
9.1 Notices Required Under SD Lien Laws. Contractor shall timely serve any notices required for preservation of lien rights under SDCL Title 44 (the “Lien Laws”), including:
(a) Notice of Furnishing or Preliminary Notice for subcontractors/suppliers (if applicable); and
(b) Notice of Intent to File Lien at least ten (10) days before filing any statement of account.
[// GUIDANCE: SD lien rules differ for general contractors vs. sub-tiers. Verify current notice timing and service requirements.]
9.2 Affidavit & Final Waivers. As a condition to final payment, Contractor shall deliver an affidavit confirming payment of all claims and unconditional final lien waivers from all tiers.
9.3 Owner’s Right to Bond Off Liens. Owner may discharge any recorded lien by posting a statutory bond; Contractor shall cooperate in such process and reimburse Owner for costs attributable to Contractor’s failure to comply with Lien Laws.
10. REPRESENTATIONS & WARRANTIES
Contractor represents, warrants, and covenants that:
a) It is duly organized, validly existing, and in good standing under the laws of its state of formation and licensed to perform the Work in SD;
b) It has examined the Site and Contract Documents and has no knowledge of conditions that would prevent performance as required;
c) All materials incorporated into the Work shall be new, of good quality, and free of liens and encumbrances;
d) It and its subcontractors will pay all wages, taxes, and contributions when due;
e) No act or omission of Contractor will violate or infringe upon any third-party rights.
All representations and warranties shall survive Final Payment for the period specified in Section 6.4 and as otherwise provided by law.
11. INSURANCE & BONDS
11.1 Insurance. Contractor shall maintain, at its own expense and for the duration of the Project, the following minimum insurance coverages with insurers rated A- VIII or better by A.M. Best:
• Commercial General Liability: [ $1,000,000] per occurrence / [ $2,000,000] aggregate;
• Automobile Liability: [ $1,000,000] combined single limit;
• Workers’ Compensation: Statutory limits;
• Employer’s Liability: [ $500,000];
• Umbrella/Excess Liability: [ $2,000,000].
Owner shall be named as additional insured on CGL and Umbrella policies using ISO form CG 20 10 11 85 or equivalent.
11.2 Certificates. Certificates of insurance and endorsements shall be delivered to Owner before the Notice to Proceed and shall provide for thirty (30) days’ prior written notice of cancellation.
11.3 Payment Bond. If the Contract Price exceeds [Threshold Amount] or if required by law or Owner, Contractor shall furnish a Payment Bond and Performance Bond, each in the penal sum of 100% of the Contract Price, on forms acceptable to Owner and issued by a surety licensed in SD.
[// GUIDANCE: SD statutory bonds are mandatory for most public projects. Private-project bonding is contractual. Insert threshold as negotiated.]
12. INDEMNIFICATION; LIMITATION OF LIABILITY
12.1 Contractor Indemnification. 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 (collectively, “Indemnitees”) from and against any and all claims, damages, losses, liabilities, fines, penalties, costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to:
(a) bodily injury, sickness, disease, or death of any person, or damage to or destruction of tangible property (other than the Work itself) to the extent caused by the negligence, gross negligence, or willful misconduct of Contractor or its subcontractors;
(b) any lien or claim asserted in connection with the Work arising out of Contractor’s failure to pay its subcontractors or suppliers; or
(c) any violation of law attributable to Contractor.
12.2 Exclusions. Contractor’s indemnity shall not apply to the extent a claim is caused by the sole negligence of Owner.
12.3 Limitation of Liability. Except for (i) Contractor’s indemnity obligations under this Section, (ii) liability arising from gross negligence or willful misconduct, or (iii) liability that cannot be limited by law, each Party’s aggregate liability to the other under this Agreement shall not exceed the Contract Price.
12.4 Consequential Damages. Neither Party shall be liable to the other for special, consequential, or punitive damages, including lost profits, except to the extent such damages are covered by insurance maintained under this Agreement.
13. DEFAULT; REMEDIES
13.1 Contractor Events of Default. The following constitute Contractor defaults:
a) Failure to perform the Work in accordance with the Contract Documents;
b) Failure to pay subcontractors/suppliers when due;
c) Insolvency or bankruptcy;
d) Material breach of any representation, warranty, or covenant.
13.2 Notice & Cure. Owner shall give Contractor written notice of default. Contractor shall commence cure within [5] days and diligently pursue completion within [10] days (or longer if agreed in writing).
13.3 Owner Remedies. If Contractor fails to cure within the above period, Owner may, at its election:
a) Supplement the workforce and deduct the cost from sums due;
b) Terminate Contractor for cause under Section 14;
c) Seek specific performance or injunctive relief;
d) Exercise any other remedies available at law or equity.
13.4 Attorneys’ Fees. The prevailing Party in any dispute arising under this Agreement shall be entitled to recover its reasonable attorneys’ fees and costs.
14. TERMINATION
14.1 Termination for Cause. Owner may terminate for cause if Contractor (a) is in default under Section 13.1 and fails to cure, or (b) repeatedly disregards applicable laws or regulations.
14.2 Termination for Convenience. Owner may, without cause, terminate the Agreement upon [7] days’ prior written notice. In such event, Contractor shall be paid (a) for Work performed to date, (b) reasonable demobilization costs, and (c) retainage applicable to completed Work; no payment shall be made for anticipated profit on unperformed Work.
14.3 Contractor Termination. Contractor may terminate upon [___] days’ written notice if Owner fails to pay undisputed amounts due within [30] days of written demand.
15. DISPUTE RESOLUTION
15.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of South Dakota, without regard to conflict-of-laws principles.
15.2 Forum Selection. Any litigation shall be instituted exclusively in the state courts located in [County, SD] (or, if jurisdiction is proper, the federal court sitting in South Dakota). Each Party submits to the personal jurisdiction of such courts.
15.3 Arbitration (Optional). [OPTIONAL: If elected by both Parties in writing, any dispute shall be resolved by binding arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules. The arbitration shall take place in [City, SD]. Judgment on the award may be entered in any court of competent jurisdiction.]
15.4 Jury Trial Waiver (Optional). [OPTIONAL: EACH PARTY HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT.]
15.5 Equitable Relief. Notwithstanding the above, either Party may seek injunctive or other equitable relief in any court of competent jurisdiction to prevent irreparable harm pending final resolution of the dispute.
16. GENERAL PROVISIONS
16.1 Amendment; Waiver. No amendment or waiver shall be effective unless in writing and signed by authorized representatives of both Parties.
16.2 Assignment. Neither Party may assign or delegate its rights or obligations without the prior written consent of the other, except Owner may assign to a lender for financing purposes.
16.3 Severability. If any provision is held invalid, the remaining provisions shall remain in full force and effect, and the invalid provision shall be reformed to the minimum extent necessary to achieve its original intent.
16.4 Entire Agreement. The Contract Documents constitute the entire agreement between the Parties, superseding all prior negotiations and understandings.
16.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and by electronic signature in accordance with the federal E-SIGN Act and applicable SD law.
16.6 Successors & Assigns. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
16.7 Notices. All notices shall be in writing and delivered (a) by hand with receipt, (b) by certified mail, return receipt requested, (c) by nationally recognized overnight courier, or (d) by email with confirmation of receipt, to the addresses set forth in the Document Header (or as later changed by notice).
17. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties hereto have executed this Construction Services Agreement as of the Effective Date.
| OWNER | CONTRACTOR |
|---|---|
| [Owner Legal Name] | [Contractor Legal Name] |
| By: ________ | By: ________ |
| Name: [Printed Name] | Name: [Printed Name] |
| Title: [Title] | Title: [Title] |
| Date: ______ | Date: ______ |
[// GUIDANCE: Consider adding notary acknowledgments if required for recording or financing. Ensure signatories possess proper authority (e.g., board resolutions for entities).]
EXHIBIT A – DRAWINGS & SPECIFICATIONS
[List or attach all plans, specifications, and other technical documents.]
EXHIBIT B – PERMIT RESPONSIBILITY MATRIX
[Allocate responsibility for obtaining and paying for each permit or approval.]
EXHIBIT C – SCHEDULE OF VALUES
[Attach Contractor’s approved schedule of values.]
[// GUIDANCE: FINAL REVIEW CHECKLIST
• Verify SD lien notice timeframes and statutory forms.
• Confirm retainage percentages with current SD statutes or, for private projects, negotiated limits.
• Insert any project-specific safety, environmental, or regulatory provisions.
• Tailor insurance limits to project risk profile and lender requirements.
• Ensure Payment & Performance Bonds comply with surety underwriting guidelines.
• Align arbitration/jury waiver provisions with client’s dispute-resolution strategy.]