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What is Construction Contract?

Construction Contract Defines terms for construction projects, including scope, timeline, and payment milestones.

Sample template:


This Construction Contract (hereinafter referred to as the "Contract") is entered into as of [Date], by and between [Client's Name] (hereinafter referred to as "Client"), and [Contractor's Name] (hereinafter referred to as "Contractor").


1.1. Description of Work

Contractor shall renovate, modify, and improve the buildings and structures located at [Address of the Property] (the "Property") in accordance with the plans and specifications set forth in Exhibit A attached hereto and made a part hereof (the "Work"). Contractor represents and warrants that it is adequately licensed, experienced, and qualified to perform the Work.

1.2. Changes to Work

Any changes or amendments to the Work, including the scope, schedule, or cost, must be agreed upon in writing by both Client and Contractor. Unless otherwise agreed by the parties, the parties shall execute a written change order, specifying the adjusted Work, schedule, and cost, which shall be incorporated into this Contract and form an integral part hereof.


2.1. Commencement Date

The Contractor shall commence the Work on [Start Date] or such other date as may be mutually agreed upon by the parties in writing (the "Commencement Date").

2.2. Completion Date

Contractor shall diligently and continuously perform the Work and shall substantially complete the Work on or before [Completion Date], subject to any extensions granted under this Contract (the "Completion Date"). In the event the Contractor fails to substantially complete the Work by the Completion Date, Contractor shall be liable to the Client for liquidated damages in the amount of $[Amount] per day for each day of delay, not to exceed a total of $[Max Amount].

2.3. Delays and Extensions

Contractor shall not be liable for any delay caused by factors beyond its reasonable control, such as labor disputes, acts of God, government restrictions, or material shortages. In the event of such delay, Contractor shall provide written notice to Client and shall be entitled to a reasonable extension of time to complete the Work, as determined by the parties in good faith.


3.1. Contract Price

Client shall pay Contractor a total price of $[Total Amount] (the "Contract Price") for the satisfactory performance and completion of the Work, subject to any adjustments pursuant to change orders or other provisions of this Contract.

3.2. Payment Milestones

Client shall pay the Contract Price to Contractor in installments at the completion of the following milestones:

  1. [Milestone #1]: $[Payment Amount #1]

  2. [Milestone #2]: $[Payment Amount #2]

  3. [Milestone #3]: $[Payment Amount #3]

Upon completion of a milestone, Contractor shall submit an invoice to Client, and Client shall pay Contractor within [Number of Days] calendar days after receipt of the invoice. Client may withhold payment for any incomplete or defective Work, subject to written notice to Contractor specifying the nature of the deficiency.

3.3. Retainage

Client shall retain ten percent (10%) of each payment due to Contractor until the final completion and acceptance of the Work by Client, at which time the retainage may be released upon Contractor submitting satisfactory lien waivers and all required closeout documentation.


4.1. Negotiation

In the event of any dispute, claim, or controversy arising out of or relating to this Contract, the parties shall first attempt to resolve the matter amicably through negotiation in good faith. Each party must designate a representative with authority to resolve the issue.

4.2. Mediation

If the dispute is not resolved through negotiation within thirty (30) calendar days, the parties agree to submit the dispute to mediation administered by a mutually agreed-upon mediator before initiating any litigation or other binding resolution process.

4.3. Litigation

If the dispute is not resolved through mediation, either party may initiate litigation or such other binding dispute resolution process as may be agreed upon by the parties in the state or federal courts of [State], and each party consents to the exclusive jurisdiction of such courts. The prevailing party in any such action shall be entitled to recover its reasonable attorneys' fees and costs.


5.1. Governing Law

This Contract shall be governed by and construed in accordance with the laws of the United States and the state of [State], without regard to conflicts of law principles.

5.2. Entire Agreement

This Contract, together with its schedules, attachments, and any written amendments, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, proposals, negotiations, and communications, whether written or oral.

5.3. Amendment

This Contract may be amended only by a written document describing the amendments, dated, and executed by both parties.

5.4. Binding Effect

This Contract shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

5.5. Execution

This Contract may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile or electronic (pdf) signatures shall be deemed original signatures for all purposes.

IN WITNESS WHEREOF, the parties have executed this Contract as of the date first above written.

__________________________ __________________________
[Client's Name] [Contractor's Name]
By: ________________________ By: ________________________
Title: _______________________ Title: _______________________
Date: _______________________ Date: ______________________

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Common Sections of a Construction Contract

In this Construction Contract, you will see the following sections:

  1. Scope of Work
  2. Project Timeline
  3. Payment
  4. Dispute Resolution
  5. Miscellaneous

Analysis/Summary of each section

  1. Scope of Work : This section describes the work the Contractor will perform, including renovations and improvements to the property. It also states that any changes to the work must be agreed upon in writing by both parties, usually through a written change order.

  2. Project Timeline : This section outlines the start and end dates for the project, as well as any penalties for not completing the work on time. It also addresses potential delays and how they will be handled, including extensions of time for factors beyond the Contractor's control.

  3. Payment : This section details the total price the Client will pay the Contractor for the work, as well as any adjustments that may be made due to change orders or other provisions. It also outlines payment milestones and the process for invoicing and payment. Additionally, it covers retainage, which is a percentage of each payment withheld until the final completion and acceptance of the work.

  4. Dispute Resolution : This section outlines the steps the parties will take to resolve any disputes, starting with negotiation, then mediation, and finally litigation or another binding resolution process if necessary. It also states that the prevailing party in any legal action will be entitled to recover its reasonable attorneys' fees and costs.

  5. Miscellaneous : This section covers various general provisions, such as governing law, the entire agreement, amendments, binding effect, and execution. It establishes that the contract is governed by the laws of a specific state and that it represents the entire agreement between the parties. It also states that any amendments must be in writing and that the contract is binding on both parties and their successors and assigns.

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