Construction Contract - Vermont

CONSTRUCTION SERVICES AGREEMENT

(State of Vermont — Attorney Review Required)

TABLE OF CONTENTS

1. Definitions
2. Engagement; Scope of Work
3. Contract Price; Payment Procedures
4. Time for Performance; Force Majeure
5. Contract Documents; Site Conditions
6. Representations and Warranties
7. Covenants of Contractor
8. Covenants of Owner
9. Changes in the Work
10. Indemnification; Insurance; Limitation of Liability
11. Lien Compliance; Retainage; Payment Bond
12. Default; Termination; Remedies
13. Dispute Resolution
14. Miscellaneous
15. Execution Blocks

1. DEFINITIONS

For ease of reference, the following capitalized terms have the meanings set forth below. Cross-references are to Articles and Sections of this Agreement.

“Agreement” – This Construction Services Agreement, inclusive of all Exhibits and any Change Orders issued hereunder.

“Application for Payment” – A written requisition, in AIA G702/703 format or other form acceptable to Owner, requesting payment for Work performed.

“Change Order” – A written amendment to the Contract Documents executed by both Parties in accordance with Section 9.1.

“Contract Documents” – Collectively, this Agreement, the Plans and Specifications, the Project Schedule, all Change Orders, and any other documents listed in Exhibit A.

“Contract Price” – The not-to-exceed sum of [INSERT AMOUNT] United States Dollars (US $[___]), subject to adjustments made pursuant to this Agreement.

“Contract Time” – The period commencing on the Notice to Proceed and expiring on the date of Substantial Completion, as may be extended under Section 4.2.

“Force Majeure Event” – Any event or condition beyond the reasonable control of the affected Party that delays, hinders, or prevents performance, including but not limited to acts of God, labor strikes, and pandemics.

“Lien Claim” – Any mechanic’s, materialman’s, or similar construction lien claim arising under the Vermont mechanic’s lien statute.

“Lien Notice” – For a claimant contracting through an owner’s agent, contractor, or subcontractor, the written notice to the owner or owner’s agent described in 9 V.S.A. § 1921(b). A contractor dealing directly with the owner relies on § 1921(a) and does not use subsection (b) as a universal preliminary-notice requirement.

“Payment Bond” – A negotiated or project-specific payment bond, if required after counsel verifies the governing public-works, financing, or contract requirements and completes Section 11.5.

“Retainage” – The portion of each Progress Payment withheld by Owner pursuant to Section 11.3.

“Substantial Completion” – The date certified by the Architect/Engineer (or, if none, by Owner) on which the Work is sufficiently complete for its intended use, subject only to punch-list items.

“Work” – All construction and related services, labor, materials, equipment, and supervision required by the Contract Documents.

2. ENGAGEMENT; SCOPE OF WORK

2.1 Engagement. Owner hereby engages Contractor as an independent contractor (not as an employee or partner) to furnish the Work at the Project located at [PROJECT ADDRESS], and Contractor accepts such engagement.

2.2 Scope. The Work shall be performed strictly in accordance with the Contract Documents. Contractor shall provide all labor, supervision, materials, tools, equipment, and incidentals necessary for proper execution and completion of the Project.

2.3 Performance Standard. Contractor shall perform the Work in a skillful, workmanlike manner, consistent with industry best practices and all applicable laws, ordinances, regulations, and codes in effect on the Effective Date.

3. CONTRACT PRICE; PAYMENT PROCEDURES

3.1 Contract Price. Owner shall pay Contractor the Contract Price for full performance, subject to additions or deductions by Change Order and to the retainage provisions herein.

3.2 Payment Schedule.
(a) Progress Payments. On or before the ☐ day of each month, Contractor shall submit an Application for Payment covering Work performed through the preceding month-end. Provided such Application is complete and accurate, Owner shall pay the undisputed portion within thirty (30) days after receipt.
(b) Final Payment. Final Payment shall be due within thirty (30) days after (i) Substantial Completion, (ii) delivery of a complete and executed final Application for Payment, (iii) satisfaction of the conditions in Section 11.4, and (iv) delivery of any applicable attorney-approved final lien waiver or release coordinated with cleared payment.

The payment periods above are negotiated contract terms under 9 V.S.A. § 4002(a). If the parties remove them without supplying another payment term, counsel should apply § 4002(c), which supplies a statutory default based on the later of the billing-period end or invoice delivery.

3.3 Default Interest. Subject to counsel's review of mandatory statutory remedies, payments not made when due shall accrue interest at the lesser of (i) one percent (1%) per month or (ii) the maximum enforceable rate, beginning five (5) business days after written notice of non-payment.

3.4 Right to Withhold. Owner may withhold amounts: (a) covered by a Lien Claim, (b) reasonably necessary to remedy defective Work, (c) subject to third-party claims, or (d) required to complete the Project in the event of Contractor default.

4. TIME FOR PERFORMANCE; FORCE MAJEURE

4.1 Commencement; Substantial Completion. Contractor shall commence the Work within [___] days after Owner’s issuance of a written Notice to Proceed and shall achieve Substantial Completion no later than [DATE] (“Scheduled Completion Date”).

4.2 Extensions. The Contract Time shall be equitably adjusted for delays caused by (a) Force Majeure Events, (b) Owner-directed Changes, (c) concealed site conditions, or (d) acts or omissions of Owner or its separate contractors, provided Contractor gives written Notice within seven (7) days of the event giving rise to the delay.

4.3 Liquidated Damages [OPTIONAL; COUNSEL REVIEW]. If Contractor fails to achieve Substantial Completion by the Scheduled Completion Date (as adjusted), Contractor shall pay Owner liquidated damages of [US $___] per calendar day. Use this clause only after counsel confirms that the amount is a supportable advance estimate rather than an unenforceable penalty.

5. CONTRACT DOCUMENTS; SITE CONDITIONS

5.1 Interpretation Priority. In the event of conflict, the following order of precedence controls: (1) Change Orders, (2) this Agreement, (3) signed addenda, (4) Plans and Specifications (figured dimensions over scaled), (5) other Contract Documents.

5.2 Site Investigation. Contractor represents it has visited the Project site, familiarized itself with local conditions, and correlated site observations with the Contract Documents.

5.3 Differing Conditions. If Contractor encounters subsurface or latent physical conditions materially differing from those indicated or ordinarily encountered, Contractor shall notify Owner within three (3) business days; equitable adjustment shall follow Section 9.

6. REPRESENTATIONS AND WARRANTIES

6.1 Contractor Representations. Contractor represents that:
(a) It is duly organized, validly existing, and in good standing under the laws of its state of formation and is authorized to transact business in Vermont.
(b) It possesses requisite skill, experience, and licensing to perform the Work.
(c) The execution and delivery of this Agreement has been duly authorized.

6.2 Performance Warranty. Contractor warrants that all Work shall be free from defects in materials and workmanship for one (1) year from the date of Substantial Completion (the “Warranty Period”). Contractor shall, at its sole cost, promptly correct any non-conforming Work discovered within the Warranty Period.

6.3 Survival. The warranties and representations herein shall survive Final Payment and any termination of this Agreement.

7. COVENANTS OF CONTRACTOR

7.1 Compliance. Contractor shall comply with all federal, state, and local laws applicable to the Work, including Vermont’s prompt pay, retainage, and lien statutes.

7.2 Supervision and Safety. Contractor shall maintain competent supervision and implement safety measures in accordance with OSHA and ASTM standards.

7.3 Labor and Materials. Contractor shall pay all wages and fringe benefits when due and shall keep the Project free of Lien Claims as required by Article 11.

7.4 Licenses and Permits. Contractor shall obtain and pay for all permits, licenses, and inspections necessary for the Work, except those expressly designated in Exhibit B as Owner’s responsibility.

8. COVENANTS OF OWNER

8.1 Access. Owner shall provide Contractor reasonable access to the Project site during normal working hours and shall coordinate with utility providers as necessary.

8.2 Information. Owner shall timely furnish surveys, legal descriptions, and any site restrictions.

8.3 Payments. Owner shall make payments in accordance with Article 3 and shall not unreasonably withhold, condition, or delay approval of Applications for Payment.

9. CHANGES IN THE WORK

9.1 Change Orders. Owner may order changes in the Work by issuing a written Change Order. Contractor shall not proceed with changed Work until the Change Order is executed, except in an emergency endangering life or property.

9.2 Adjustments. Adjustments to Contract Price or Contract Time shall, where practicable, be mutually agreed before the changed Work commences. If the Parties fail to agree, Contractor shall proceed under protest, and the dispute shall be resolved under Article 13.

10. INDEMNIFICATION; INSURANCE; LIMITATION OF LIABILITY

10.1 Contractor Indemnity. To the fullest extent permitted by law, Contractor shall defend, indemnify, and hold harmless Owner, Owner’s officers, directors, employees, agents, and consultants from and against any and all claims, damages, losses, liabilities, and expenses (including reasonable attorneys’ fees) arising out of or resulting from the performance of the Work, but only to the extent caused by the negligence, recklessness, or willful misconduct of Contractor, its Subcontractors, or anyone directly or indirectly employed by them.

10.2 Insurance. Contractor shall maintain, at its own expense and for the duration of the Project (and such longer periods as specified below), the following minimum insurance:
(a) Commercial General Liability – $[___] per occurrence / $[___] aggregate;
(b) Automobile Liability – $[___] combined single limit;
(c) Workers’ Compensation – statutory limits;
(d) Employer’s Liability – $[___] each accident;
(e) Contractors Pollution Liability [if applicable] – $[___] per claim;
(f) Completed Operations coverage through the end of the Warranty Period.
Policies shall (i) be primary and non-contributory, (ii) name Owner as an additional insured on a CG 20 10 11 85 or equivalent form, and (iii) include waivers of subrogation in favor of Owner. Certificates of insurance and endorsements shall be delivered prior to commencement of the Work.

10.3 Limitation of Liability [OPTIONAL; COUNSEL REVIEW]. To the extent enforceable under the law governing the claim, the aggregate liability of Owner to Contractor, whether in contract, tort (including negligence), or any other legal theory arising out of or related to this Agreement, shall not exceed the Contract Price. This limitation shall not apply to Owner’s obligation to make payments properly due or to liability that cannot lawfully be limited, including any selected carve-outs for gross negligence or willful misconduct.

11. LIEN COMPLIANCE; RETAINAGE; PAYMENT BOND

11.1 Claimant-Tier and Notice Gate. A Contractor that contracted directly with Owner falls under 9 V.S.A. § 1921(a); Vermont law does not impose the former ten-day “Initial Lien Notice” stated in this Agreement. A claimant contracting through an owner’s agent, contractor, or subcontractor obtains the subsection (b) lien by giving written notice to Owner or Owner’s agent having charge of the property. The notice must include the payment-due date if known, and the remote claimant’s lien reaches the contract-price portion remaining unpaid when the notice is received. Contractor shall identify each claimant’s tier, collect copies of any subsection (b) notices actually delivered, and promptly provide those copies to Owner.

11.2 Recorded Lien and Contractual Cure. A claimant preserving a lien beyond § 1921(c)’s 180-day period records a signed memorandum with the town clerk under § 1923 and must satisfy § 1924’s action-and-attachment timing to enforce it. Vermont Chapter 51 does not impose the former five-day automatic discharge requirement. If a Lien Claim is recorded, Contractor shall within [____] days after written notice [cause an authorized release to be recorded / provide counsel-approved security if legally available / commence a good-faith contest / other: ____]. This is a negotiated contractual cure, not a statement of the statutory release period.

11.3 Retainage. Section 4005 does not set the former ten-percent cap. If the parties agree to retainage, Owner may withhold [____]% / $[____] / other: ____ under the payment schedule. Amounts retained during performance and due for release upon final completion shall be paid within thirty (30) days after final acceptance of the Work. Any reduction at Substantial Completion shall be stated here: [________________________________]. Late or unreasonably withheld retainage remains subject to § 4005(d) and the statutory remedies it incorporates.

11.4 Conditions Precedent to Final Payment. As a condition to Final Payment, Contractor shall furnish:
(a) An affidavit that all payrolls, bills for materials and equipment, and other indebtedness in connection with the Work have been paid or otherwise satisfied;
(b) Attorney-approved final lien waivers or releases from Contractor and applicable Subcontractors or Suppliers, effective only at a time and to a scope permitted by current law and coordinated with cleared payment; § 1921(f) makes advance lien waivers unenforceable;
(c) A completed punch list signed by Owner’s representative;
(d) Close-out documents, including warranties, operating manuals, as-built drawings, and equipment start-up reports.

11.5 Payment Bond [OPTIONAL; VERIFY PROJECT-SPECIFIC AUTHORITY]. The lien and prompt-payment sections cited in this Agreement do not create a universal private-project dollar threshold or a mandatory bond in 100% of the Contract Price. If Owner requires a negotiated bond or the Project is subject to a separate public-works, lender, grant, or procurement requirement, counsel shall insert the verified authority, amount, form, surety qualifications, beneficiaries, delivery deadline, and remedies here: [________________________________]. If no verified requirement or negotiated bond applies, delete this section and all Payment Bond references.

12. DEFAULT; TERMINATION; REMEDIES

12.1 Events of Default – Contractor. The following constitute Contractor defaults:
(a) Failure to comply with material provisions of the Contract Documents and failure to cure within seven (7) days after written notice;
(b) Failure to supply sufficient labor, materials, or supervision;
(c) To the extent enforceable and not stayed, preempted, or invalidated by bankruptcy law, filing of a voluntary or involuntary bankruptcy petition that is not dismissed within sixty (60) days;
(d) Failure to maintain required insurance or any verified and completed Payment Bond obligation under Section 11.5;
(e) Failure to take the selected contractual lien-response action within the completed timeframe in Section 11.2.

12.2 Owner Remedies. Upon an uncured Contractor default, Owner may, without prejudice to other rights, (i) withhold further payments, (ii) supplement Contractor’s forces, (iii) offset Owner’s completion costs against the Contract Price, or (iv) terminate this Agreement upon three (3) days’ written notice.

12.3 Events of Default – Owner. Owner defaults by: (a) failing to pay undisputed amounts within seven (7) days after written notice, or (b) otherwise materially breaching its obligations.

12.4 Contractor Remedies. Upon an uncured Owner default, Contractor may suspend Work or terminate this Agreement upon ten (10) days’ written notice and recover (i) amounts due for performed Work, (ii) reasonable demobilization costs, and (iii) verified, reasonable overhead and profit on Work not performed, up to the Contract Price cap.

12.5 Mitigation. Both Parties shall use commercially reasonable efforts to mitigate damages in the event of any default.

13. DISPUTE RESOLUTION

13.1 Negotiation. Any dispute shall first be submitted to senior executives of each Party for good-faith negotiations.

13.2 Mediation [OPTIONAL]. If the dispute is not resolved within fifteen (15) days, either Party may demand non-binding mediation administered by [AMERICAN ARBITRATION ASSOCIATION / OTHER] in [CITY, VT].

13.3 Arbitration [OPTIONAL; COUNSEL REVIEW]. If the dispute remains unresolved thirty (30) days after mediation, either Party may elect binding arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. Use this option only after counsel confirms assent, scope, forum, cost allocation, remedies, and enforceability. Judgment on the award may be sought in a court of competent jurisdiction. If neither Party elects arbitration, Section 13.4 shall control.

13.4 Litigation [OPTIONAL FORUM SELECTION]. Absent arbitration, and only to the extent the selected forum clause is enforceable for the dispute, the exclusive forum for litigation arising from this Agreement shall be the state courts of the State of Vermont sitting in [COUNTY], and each Party submits to that forum.

13.5 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Vermont, without regard to its conflict-of-laws principles.

13.6 Injunctive Relief. Either Party may seek injunctive or other equitable relief to prevent or curtail actual or threatened breach of this Agreement, in addition to any other remedies.

13.7 Jury-Trial Waiver [OPTIONAL]. TO THE EXTENT PERMITTED BY LAW, THE PARTIES KNOWINGLY AND VOLUNTARILY WAIVE THEIR RIGHT TO A JURY TRIAL FOR ANY ACTION ARISING OUT OF THIS AGREEMENT.

13.8 Attorneys’ Fees [OPTIONAL; COUNSEL REVIEW]. To the extent enforceable, the prevailing Party in any dispute shall recover its reasonable attorneys’ fees, costs, and expenses. Delete this sentence if the parties do not select contractual fee shifting.

14. MISCELLANEOUS

14.1 Independent Contractor. The parties intend an independent-contractor relationship; neither Party is an agent or partner of the other. This label does not override any mandatory worker-classification, tax, licensing, or employment rule.

14.2 Assignment. Neither Party may assign this Agreement without the prior written consent of the other, except that Owner may assign to a lender providing construction financing upon written notice.

14.3 Entire Agreement; Amendment. This Agreement, together with the Contract Documents, constitutes the entire agreement between the Parties and supersedes all prior agreements. No amendment is effective unless in writing and signed by both Parties.

14.4 Severability. If any provision is held unenforceable, the remaining provisions shall remain in full force, and the unenforceable provision shall be reformed to the minimum extent necessary to achieve its intent.

14.5 Waiver. A waiver of any breach must be in writing. No waiver constitutes a waiver of subsequent breaches.

14.6 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. Signatures transmitted by PDF or other electronic means shall be deemed original.

14.7 Notice. All notices shall be in writing and delivered by (i) personal delivery, (ii) nationally recognized overnight courier, or (iii) certified mail, return receipt requested, addressed to the addresses set forth below (or as later changed by notice). Notice is effective upon receipt.

14.8 Survival. Provisions that by their nature should survive termination or expiration (including but not limited to indemnity, warranties, dispute-resolution, and confidentiality) shall so survive.

15. EXECUTION BLOCKS

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

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

Address for Notices:
☐

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

Address for Notices:
☐

SOURCES AND REFERENCES

• 9 V.S.A. § 1921 — https://legislature.vermont.gov/statutes/section/09/051/01921
• 9 V.S.A. § 1923 — https://legislature.vermont.gov/statutes/section/09/051/01923
• 9 V.S.A. § 1924 — https://legislature.vermont.gov/statutes/section/09/051/01924
• 9 V.S.A. § 4002 — https://legislature.vermont.gov/statutes/section/09/102/04002
• 9 V.S.A. § 4005 — https://legislature.vermont.gov/statutes/section/09/102/04005

The Vermont Legislature states that its online statutes include the actions of the 2025 session and are provided as an unofficial convenience copy of the Vermont Statutes Annotated. Counsel must confirm any later enacted change and the governing project-specific law before signing.

EXHIBIT A – CONTRACT DOCUMENTS

1. Drawings prepared by [ARCHITECT/ENGINEER] dated ☐.
2. Specifications prepared by ☐ dated ☐.
3. Project Schedule dated ☐.
4. [List any geotechnical reports, addenda, or standards.]

EXHIBIT B – RESPONSIBILITY MATRIX

(Identify permits, owner-furnished materials, utilities, surveys, testing, etc.)

EXHIBIT C – SCHEDULE OF VALUES

(Attach Contractor’s detailed cost breakdown.)

EXHIBIT D – INSURANCE CERTIFICATES AND ENDORSEMENTS

(Attach certificates meeting Section 10.2.)