Contractor-Friendly Construction Contract Template
CONSTRUCTION CONTRACT
This Construction Contract (the "Agreement") is made and entered into as of this [Effective Date] (the "Effective Date"), by and between:
[Owner Full Legal Name], an individual residing at [Owner Address] (hereinafter referred to as the "Owner");
and
[Contractor Full Legal Name], a company duly organized and existing under the laws of [Country], having its principal place of business at [Contractor Address], and registered under number [Registration Number] (hereinafter referred to as the "Contractor").
The Owner and the Contractor shall hereinafter be referred to individually as a "Party" and collectively as the "Parties".
WHEREAS, the Owner is the lawful owner of certain real property situated at [Project Site Address] (the "Site") and desires to procure the design and construction of an extension or addition to the existing structure located thereon (the "Project");
WHEREAS, the Contractor is a duly licensed and qualified business engaged in the trade of construction services and holds itself out as possessing the requisite skill, experience, personnel, equipment, and resources to undertake and complete the Project in a workmanlike manner;
WHEREAS, the Owner has invited the Contractor to perform the Project upon the terms and conditions set out herein, and the Contractor is willing to accept such engagement upon a cost-plus-fee basis as more fully set forth below;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Definitions and Interpretation
In this Agreement, unless the context otherwise requires, the following terms shall bear the meanings respectively ascribed to them hereunder, and the singular shall include the plural and vice versa, and references to any gender shall include all genders.
"Allowable Costs" shall mean all direct and indirect costs reasonably and necessarily incurred by the Contractor in the proper performance of the Works, including without limitation the cost of labor, materials, supplies, plant, equipment, tools, transportation, Subcontractor charges, site overheads, bonds, insurance premiums, taxes, duties, and any other costs expressly identified herein as reimbursable, computed in accordance with the Contractor's customary accounting practices consistently applied.
"Contract Price" shall mean the aggregate sum payable to the Contractor for the full and proper performance of the Works, comprising the Allowable Costs plus the Contractor's Fee, together with any adjustments made pursuant to Change Orders issued in accordance with this Agreement.
"Contractor's Fee" shall mean the fee payable to the Contractor as remuneration for its services, calculated as [Fee Percentage]% of the Allowable Costs or such fixed sum as the Parties may otherwise agree, as further particularized in the clauses dealing with the Contract Price and Fee Structure.
"Change Order" shall mean a written instruction, duly signed by both Parties, authorizing an alteration, addition, omission, or other variation to the Works, the Contract Price, the Project Schedule, or any other term of this Agreement.
"Defects Liability Period" shall mean the period of [Number] months commencing upon the date of Substantial Completion, during which the Contractor shall remain liable for the rectification of defects in the Works at its own cost pursuant to the warranty provisions set out herein.
"Force Majeure" shall mean any event or circumstance beyond the reasonable control of a Party which could not have been prevented or avoided by the exercise of reasonable diligence, as further described in the clauses dealing with Delays and Force Majeure.
"Project Schedule" shall mean the schedule of works, including commencement date, intermediate milestones, and date for Substantial Completion, as agreed by the Parties in writing and as may be adjusted from time to time by Change Order.
"Substantial Completion" shall mean the stage at which the Works, or an identifiable portion thereof, have been completed to such an extent that they may be safely and conveniently used by the Owner for their intended purpose, notwithstanding the existence of minor outstanding items or defects not materially impairing such use.
"Works" shall mean the construction of the extension or addition to the Owner's existing structure, together with all associated preparatory, ancillary, and finishing works, as more fully described in the Scope of Work and as varied from time to time by Change Order.
Headings and sub-headings are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
Scope of Work
The Contractor shall design, procure, construct, complete, test, commission, and hand over to the Owner the extension or addition described hereinafter, comprising the construction of [Description of Extension or Addition, including dimensions, floors, rooms, and intended use] at the Site, together with all works reasonably inferable therefrom as necessary for the proper completion thereof in a workmanlike manner.
The Works shall include, without limitation, all site preparation, excavation, foundations, structural works, walls, roofing, flooring, carpentry, plumbing, electrical installations, mechanical systems, insulation, interior and exterior finishes, connection to existing utilities and structures, and such other items as are reasonably necessary for the Works to be fit for their intended purpose.
The Contractor shall furnish all labor, supervision, materials, plant, tools, equipment, consumables, transportation, temporary works, and other items of whatsoever nature required for the proper execution and completion of the Works, save for those items which this Agreement expressly provides shall be furnished by the Owner.
The Works shall be performed in strict accordance with the drawings, specifications, and technical requirements agreed between the Parties in writing from time to time, and in the absence of such written agreement, in accordance with the standards of good construction practice generally prevailing in the industry.
Any work not expressly described herein but reasonably inferable as necessary for the completion of the Works in accordance with their intended purpose shall be deemed included within the Scope of Work.
The Contractor shall not be obliged to perform any work falling outside the Scope of Work unless and until a Change Order has been executed by both Parties in accordance with the provisions governing Change Orders.
The Owner acknowledges that the Scope of Work is based upon information made available to the Contractor at the Effective Date, and that any material inaccuracy, omission, or change in such information may entitle the Contractor to a Change Order adjusting the Contract Price and the Project Schedule accordingly.
Payment Terms and Invoicing
In consideration of the proper performance of the Works, the Owner shall pay the Contractor the Contract Price, comprising the Allowable Costs plus the Contractor's Fee, in [Currency], in accordance with the invoicing and payment procedure set out in this section.
The Contractor shall submit to the Owner, no less frequently than once per [Billing Period, e.g., calendar month], an application for payment accompanied by reasonable supporting documentation, including but not limited to invoices, timesheets, payroll records, delivery notes, Subcontractor statements, and such other substantiation as the Owner may reasonably require to verify the Allowable Costs incurred during the preceding period.
Each application for payment shall set forth the Allowable Costs incurred during the relevant period, the proportionate Contractor's Fee thereon, the aggregate amount previously invoiced, the aggregate amount previously paid, and the net amount then due.
The Owner shall, within [Number] days of receipt of each application for payment, either (i) pay the undisputed amount to the Contractor by electronic transfer to the bank account nominated by the Contractor in writing, or (ii) deliver to the Contractor a written notice specifying in reasonable detail any amount in bona fide dispute together with the grounds therefor; in all events, the undisputed portion shall be paid within the said period.
Any amount not paid when due shall bear interest at the rate of [Interest Rate]% per [annum/month] or the maximum rate permitted by applicable law, whichever is lower, calculated from the due date until the date of actual payment, without prejudice to any other right or remedy available to the Contractor.
The Owner shall pay a mobilization advance equal to [Percentage]% of the estimated Contract Price upon execution of this Agreement, such advance to be set off against subsequent applications for payment on a pro-rata basis.
All taxes, duties, levies, and governmental charges of whatsoever nature imposed upon the Works, the Contract Price, or any payment hereunder (other than taxes imposed upon the Contractor's net income) shall be borne exclusively by the Owner, and the Contract Price shall be grossed-up accordingly where required by applicable law.
Should the Owner fail to pay any undisputed amount within [Number] days after the due date, the Contractor shall be entitled, upon [Number] days' further written notice, to suspend the Works in whole or in part without prejudice to its other rights and remedies, and any resulting delay shall entitle the Contractor to an extension of time and reimbursement of consequent costs.
Final payment, representing the balance of the Contract Price together with any retention monies then due, shall be made within [Number] days following the Contractor's issuance of its final invoice after Substantial Completion and resolution of any outstanding items.
Contractor's Obligations
The Contractor shall perform the Works with due care, skill, and diligence, and in a workmanlike manner consistent with the standards reasonably expected of a competent and experienced contractor undertaking works of a similar nature, scope, and complexity.
The Contractor shall provide adequate and competent supervision at the Site at all times when work is being performed, and shall designate in writing a project manager who shall act as the Contractor's authorized representative for all day-to-day matters arising under this Agreement.
The Contractor shall maintain full and accurate books, records, and accounts of all Allowable Costs incurred in connection with the Works, and shall preserve the same for a period of not less than [Number] years following final completion, and shall make such records available for inspection by the Owner or its duly authorized representative upon reasonable prior notice during normal business hours.
The Contractor shall comply with all reasonable instructions given by the Owner in writing, provided that no such instruction shall constitute a Change Order unless issued in accordance with the provisions hereof, and provided further that the Contractor shall not be bound to comply with any instruction which, in its reasonable professional judgment, would compromise safety, quality, or the structural integrity of the Works.
The Contractor shall take all reasonable precautions to protect the Site, the Works in progress, adjacent property, and persons on or near the Site from injury, loss, or damage arising from or in connection with the execution of the Works.
The Contractor shall keep the Site reasonably clean, tidy, and free from unnecessary debris during the course of the Works, and shall, upon completion, remove from the Site all surplus materials, plant, equipment, temporary works, waste, and rubbish of whatsoever nature.
The Contractor shall promptly notify the Owner in writing of any condition, instruction, drawing, specification, or circumstance which, in the Contractor's reasonable opinion, is likely to affect the Allowable Costs, the Project Schedule, or the quality or suitability of the Works for their intended purpose.
The Contractor shall use commercially reasonable endeavors to procure Allowable Costs at competitive rates and on commercially reasonable terms, having regard to the quality, timing, and other requirements of the Works.
Owner's Obligations
The Owner shall, prior to the commencement of the Works and at all times thereafter as required, provide the Contractor with safe, exclusive, and unimpeded access to and possession of such portions of the Site as are reasonably necessary for the proper execution of the Works.
The Owner shall furnish to the Contractor, at no cost to the Contractor, all drawings, specifications, surveys, soil reports, title documents, and other information in the Owner's possession or control that are relevant to the Works, and shall warrant the accuracy and completeness of the same to the best of the Owner's knowledge.
The Owner shall make timely payment of all sums due to the Contractor under this Agreement in accordance with the payment provisions set out herein, and shall not withhold any payment otherwise than in accordance with the express terms hereof.
The Owner shall review, respond to, and either approve or provide reasonable written comments upon all submittals, requests for information, drawings, samples, and other documents forwarded by the Contractor for the Owner's review within [Number] business days of receipt thereof, failing which the said submittals shall be deemed approved.
The Owner shall obtain and maintain, at its own cost, all consents, easements, approvals, and permissions from neighboring landowners, homeowners' associations, utility providers, and any other third parties as may be necessary for the carrying out of the Works, save for those permits and licenses expressly allocated to the Contractor hereunder.
The Owner shall promptly notify the Contractor in writing of any matter coming to its attention which may affect the performance of the Works, including without limitation any claim, dispute, or demand asserted by any third party in relation to the Site or the Works.
The Owner shall not interfere with, obstruct, or impede the Contractor's performance of the Works, and shall not instruct the Contractor's employees, Subcontractors, or suppliers directly otherwise than through the Contractor's project manager.
The Owner shall provide, at its own cost and at the Site boundary or such other point as the Parties may agree, reasonable supplies of electricity, water, and such other utilities as the Contractor may reasonably require for the execution of the Works.
Subcontractors and Site Personnel
The Contractor shall be entitled to engage Subcontractors, suppliers, and consultants of its own choosing for the performance of any part of the Works, and shall not be required to obtain the Owner's prior consent save in respect of Subcontractors engaged for principal trades, in which case the Owner's consent shall not be unreasonably withheld, conditioned, or delayed.
The engagement of any Subcontractor shall not relieve the Contractor of any of its obligations under this Agreement, and the Contractor shall remain fully responsible to the Owner for the acts, defaults, and omissions of its Subcontractors as if they were its own.
The Contractor shall ensure that each Subcontractor is suitably qualified, licensed, and insured for the work it is engaged to perform, and shall impose upon each Subcontractor obligations consistent with those assumed by the Contractor under this Agreement to the extent relevant to the subcontracted work.
The Owner shall have no contractual relationship with any Subcontractor, and shall direct all communications relating to any Subcontractor's work exclusively through the Contractor.
The Contractor shall be responsible for the discipline, conduct, and management of all its personnel and the personnel of its Subcontractors while at the Site, and shall procure that all such persons observe reasonable site rules, safety procedures, and standards of conduct.
The Contractor shall have the right at any time, in its sole discretion, to replace, remove, or substitute any Subcontractor or any member of the Site personnel, and shall promptly do so upon the Owner's reasonable written request where such person is engaged in misconduct or in breach of applicable law.
The costs of all Subcontractors properly engaged in connection with the Works shall be reimbursable to the Contractor as Allowable Costs, and the Contractor's Fee shall accrue upon such costs in the manner set out herein.
Materials, Equipment and Workmanship
The Contractor shall furnish materials and equipment which are new (unless otherwise agreed in writing), of good merchantable quality, free from defects, and fit for their intended use within the Works, consistent with the specifications agreed by the Parties.
Where the specifications identify a particular manufacturer, brand, or model, the Contractor may, with the prior written consent of the Owner (such consent not to be unreasonably withheld), substitute an item of equivalent quality, function, and appearance.
All workmanship shall be of a standard commensurate with sound construction practice generally prevailing in the industry for projects of comparable nature and complexity.
The Contractor shall arrange for the safe delivery, unloading, storage, protection, and handling of all materials and equipment at or in the vicinity of the Site, and shall take all reasonable precautions against theft, vandalism, weather damage, and other risks of loss.
Any materials or equipment rejected by the Owner or by any competent inspector on the ground that they do not conform to the specifications shall be promptly removed from the Site by the Contractor and replaced with conforming items; the costs of such replacement shall be borne by the Owner as Allowable Costs save where the non-conformity is attributable to the Contractor's fault.
Samples, mock-ups, and shop drawings, where required, shall be submitted by the Contractor to the Owner for review in accordance with the Project Schedule, and the Owner's failure to respond within the time stipulated for Owner review shall constitute approval thereof.
The Contractor shall pass on to the Owner the benefit of any manufacturer's or supplier's warranty obtained in respect of materials and equipment incorporated into the Works, to the extent assignable, and such warranties shall be in addition to the Contractor's warranty obligations hereunder.
Contract Price and Fee Structure
The Contract Price shall be computed on a cost-plus-fee basis, comprising (i) the Allowable Costs properly incurred by the Contractor in the performance of the Works, and (ii) the Contractor's Fee calculated as [Fee Percentage]% of such Allowable Costs, together with any adjustments effected by Change Order.
Allowable Costs shall include, without limitation: wages, salaries, benefits, and payroll burdens of personnel engaged in the Works (including site supervision); the cost of all materials, supplies, and consumables; rental charges for plant and equipment at prevailing market rates or, where owned by the Contractor, at rates mutually agreed; Subcontractor payments; transportation and freight; insurance premiums attributable to the Works; bonds and sureties; permit fees and governmental charges; site office and welfare facility costs; and all other costs reasonably and necessarily incurred in connection with the Works.
The Contractor's Fee shall constitute full compensation to the Contractor for its home office overhead, general administration, profit, and the use of its name and reputation, and no additional charge shall be made for such items except as expressly provided herein or in a Change Order.
The Parties may agree in writing upon a target cost or guaranteed maximum price (the "GMP") for the Works, in which case any underrun or overrun of the GMP shall be allocated between the Parties in such proportions as they may agree in the relevant written instrument; in the absence of any such agreement, there shall be no cap upon the Allowable Costs.
The Contractor shall provide the Owner with a non-binding estimate of the anticipated Contract Price prior to commencement of the Works, which estimate shall be made in good faith on the basis of information then available to the Contractor and shall not be construed as a fixed price, warranty, or guarantee of the final Contract Price.
Where circumstances require the use of personnel, plant, or materials outside of normal working hours or at premium rates, the Contractor shall be entitled to recover the resulting premium as an Allowable Cost, provided that such use is reasonable in the circumstances.
Any discounts, rebates, refunds, or similar benefits received by the Contractor from suppliers or Subcontractors in connection with the Works shall be credited against the relevant Allowable Costs, save where attributable to the Contractor's purchasing arrangements of general application.
Project Schedule and Milestones
The Works shall commence on or about [Commencement Date] and shall proceed with reasonable diligence so as to achieve Substantial Completion on or about [Target Completion Date], subject to such extensions of time as may be granted in accordance with this Agreement.
The Project Schedule, including intermediate milestones (if any), shall be as agreed between the Parties in writing prior to commencement of the Works, and may be adjusted from time to time by Change Order or by extension of time granted hereunder.
The Contractor shall use commercially reasonable endeavors to adhere to the Project Schedule but does not guarantee any particular date for completion of the Works or any milestone, it being understood that construction schedules are subject to numerous contingencies not within the Contractor's exclusive control.
The Contractor shall keep the Owner reasonably informed as to progress against the Project Schedule, and shall promptly notify the Owner in writing of any circumstance which, in the Contractor's reasonable judgment, is likely to cause material delay to the Works.
The Contractor shall be entitled to an extension of time, together with reimbursement of consequent costs as Allowable Costs, in respect of any delay caused by (i) any act, omission, or breach of the Owner, (ii) any Change Order, (iii) Force Majeure, (iv) adverse weather of a severity not reasonably foreseeable, (v) unforeseen Site conditions, or (vi) any other matter beyond the Contractor's reasonable control.
Upon Substantial Completion, the Contractor shall notify the Owner in writing and the Parties shall jointly inspect the Works; thereafter, the Contractor shall diligently attend to any outstanding items identified in a written punch list prepared by the Parties.
No liquidated damages, penalties, or other sanctions shall be payable by the Contractor in respect of any delay in completion of the Works save as may be expressly agreed in a written instrument signed by both Parties and specifically identifying the amount of such damages.
Change Orders and Variations
The Owner may, from time to time during the course of the Works, request in writing variations to the Scope of Work, the specifications, the Project Schedule, or any other matter affecting the Works, and the Contractor shall, within a reasonable time, respond with a written proposal setting forth the anticipated impact of such variation upon the Contract Price and the Project Schedule.
No variation shall be binding upon either Party or constitute an authorized Change Order unless and until it is set forth in writing and signed by duly authorized representatives of both Parties.
The Contractor shall likewise be entitled to propose variations where it considers the same necessary or desirable in the interests of the Works, and such proposals shall be dealt with on the same basis as variations proposed by the Owner.
Where a variation is required by reason of any Change in Law, unforeseen Site condition, or other matter beyond the Contractor's reasonable control, the Contractor shall be entitled to a Change Order adjusting the Contract Price and the Project Schedule accordingly, notwithstanding the absence of any specific request from the Owner.
Pending agreement upon the terms of a Change Order, the Contractor shall not be obliged to proceed with the varied work, but may at its election do so under reservation of rights, in which event it shall be entitled to recover its Allowable Costs plus the Contractor's Fee in respect of such varied work.
Minor variations which do not materially affect the Contract Price, the Project Schedule, or the character of the Works may be effected by field directive issued by the Owner and acknowledged in writing by the Contractor, without the formality of a full Change Order.
All Change Orders shall be numbered sequentially and shall together form part of this Agreement.
Permits, Licenses and Regulatory Compliance
The Contractor shall apply for and obtain, at the Owner's cost (as Allowable Cost), all building permits, construction permits, and similar trade-specific permits as are customarily obtained by the contractor in the jurisdiction in which the Site is located.
The Owner shall apply for and obtain, at its own cost, all planning permissions, zoning approvals, land-use consents, and other permits of an owner-specific character, including any approvals required from homeowners' associations or similar bodies.
Each Party shall cooperate with the other and furnish such information, signatures, and documents as the other may reasonably require in connection with the applications contemplated by this section.
The Contractor shall perform the Works in material compliance with all laws, regulations, codes, by-laws, and ordinances applicable to the Works at the Site at the time of performance, and shall observe all reasonable rules and standards of the applicable building authorities.
Any Change in Law occurring after the Effective Date which affects the Contractor's cost or time of performance shall entitle the Contractor to a Change Order adjusting the Contract Price and the Project Schedule accordingly.
The Contractor shall maintain in force at all relevant times such business licenses, trade registrations, and professional qualifications as are required by applicable law for the performance of the Works.
The Owner shall not require the Contractor to perform any work which, in the Contractor's reasonable opinion, would contravene applicable law or any permit or approval relating to the Works.
Site Access and Site Conditions
The Owner shall grant to the Contractor, its Subcontractors, employees, agents, and invitees unrestricted access to and possession of the Site (or such portions thereof as are necessary for the Works) during normal working hours and at such other times as the Contractor may reasonably require, from the Effective Date until final completion of the Works.
Where the Site is partially occupied by the Owner or any other person during the course of the Works, the Owner shall procure that the Contractor's access and operations are not materially impeded, and any limitation upon the Contractor's access shall entitle the Contractor to a Change Order.
The Owner warrants to the best of its knowledge the accuracy of all information supplied to the Contractor regarding the condition of the Site, including without limitation the location of underground utilities, structures, boundaries, easements, hazardous substances, and soil conditions.
Should the Contractor encounter any Site condition which (i) differs materially from the information supplied by the Owner, (ii) could not reasonably have been foreseen by a competent contractor at the Effective Date, or (iii) involves hazardous substances not identified by the Owner, the Contractor shall promptly notify the Owner, and shall be entitled to a Change Order adjusting the Contract Price and the Project Schedule accordingly.
The Contractor shall have no responsibility for the identification, handling, abatement, or removal of any pre-existing hazardous substances at the Site, and the Owner shall indemnify the Contractor against all claims, costs, losses, and liabilities arising therefrom.
The Contractor shall take reasonable measures to minimize disturbance to the Owner and to neighboring properties during the performance of the Works, consistent with the efficient and timely execution thereof.
The Owner shall be responsible for the security of the Site outside the Contractor's working hours, save to the extent that the Parties have expressly agreed otherwise in writing.
Inspections, Testing and Acceptance
The Owner, by itself or through its duly authorized representative, shall be entitled to inspect the Works at the Site during normal working hours upon reasonable prior notice to the Contractor, provided that such inspections shall not unduly interfere with the progress of the Works.
The Contractor shall carry out such tests upon the Works and materials as are customary for works of the nature undertaken, as are required by applicable law or applicable building codes, or as the Parties may otherwise agree in writing, and shall promptly furnish the results thereof to the Owner.
The costs of all customary and required tests shall be reimbursable as Allowable Costs; the costs of any additional tests requested by the Owner shall likewise be reimbursable, save where such tests reveal defective work attributable to the Contractor's fault, in which case the Contractor shall bear the costs of the test and of the rectification of the defect.
Upon the Contractor's notice of Substantial Completion, the Parties shall jointly inspect the Works and shall agree upon a punch list of minor outstanding items (if any), which the Contractor shall attend to with reasonable diligence.
The Owner shall not unreasonably withhold or delay acceptance of the Works upon Substantial Completion, and shall be deemed to have accepted the Works if (i) the Owner takes possession or beneficial use of the Works, (ii) the Owner fails to issue a reasoned written objection within [Number] days of the Contractor's notice of Substantial Completion, or (iii) a certificate of Substantial Completion is issued by any competent authority.
Final completion of the Works shall occur upon the attendance by the Contractor to all items upon the punch list to a standard reasonable in the circumstances, whereupon the Contractor shall issue its final invoice.
The acceptance of the Works by the Owner shall not relieve the Contractor of its warranty obligations under this Agreement nor of liability for latent defects.
Warranty and Defects Liability
The Contractor warrants to the Owner that the Works shall be performed in a workmanlike manner, substantially in accordance with the Scope of Work and the specifications agreed by the Parties, and free from material defects in workmanship arising from the Contractor's performance.
The warranty under this section shall extend for the Defects Liability Period commencing upon the date of Substantial Completion, and shall be the Owner's sole and exclusive remedy, and the Contractor's sole and exclusive obligation, in respect of defects in the Works.
Upon the Owner's written notice of any defect falling within the warranty, delivered during the Defects Liability Period and specifying the defect with reasonable particularity, the Contractor shall, at its election, repair, replace, or re-perform the defective element of the Works at its own cost within a reasonable time.
The warranty shall not apply to, and the Contractor shall have no liability in respect of: (i) ordinary wear and tear; (ii) damage resulting from misuse, abuse, neglect, or improper maintenance by the Owner or any third party; (iii) damage resulting from alterations or additions to the Works carried out by any party other than the Contractor; (iv) acts of God, Force Majeure, or events beyond the Contractor's reasonable control; (v) defects in materials or designs furnished or specified by the Owner; or (vi) defects in any portion of the pre-existing structure not forming part of the Works.
All implied warranties, conditions, and terms of any nature, whether statutory or otherwise, including without limitation implied warranties of merchantability and fitness for a particular purpose, are hereby excluded to the fullest extent permitted by applicable law.
In no event shall the Contractor be liable to the Owner for any indirect, incidental, consequential, special, exemplary, or punitive damages, including without limitation loss of use, loss of rent, loss of profit, or diminution in value, howsoever arising.
The aggregate liability of the Contractor under or in connection with this Agreement, whether in contract, tort, or otherwise, shall not exceed the Contract Price actually paid by the Owner, save in respect of liability for death or personal injury caused by the Contractor's negligence, or for fraud, or for any other liability which cannot be excluded or limited by applicable law.
Upon expiry of the Defects Liability Period, the Contractor shall be finally and fully released from all obligations and liabilities in respect of the Works, save in respect of claims notified in writing to the Contractor prior to such expiry.
Insurance and Indemnification
The Contractor shall maintain, at its own cost (recoverable as Allowable Cost), such policies of insurance as are customary and appropriate for a contractor undertaking works of the nature of the Works, including (i) commercial general liability insurance, (ii) workers' compensation or equivalent employer's liability insurance where required by applicable law, (iii) motor vehicle liability insurance in respect of its vehicles used in connection with the Works, and (iv) such other coverages as the Parties may agree in writing.
The Owner shall maintain, at its own cost, such policies of insurance as are customary and appropriate for an owner of real property undertaking construction thereon, including (i) property insurance covering the existing structure and the Works in progress against the usual perils (including fire, lightning, storm, flood, theft, vandalism, and malicious damage) on a replacement-cost basis, (ii) builder's risk insurance in respect of the Works, and (iii) owner's liability insurance.
Each Party shall, upon request, furnish the other with certificates of insurance evidencing the coverages required of it under this section, and shall give reasonable prior written notice of any material change in or cancellation of such coverages.
The Parties mutually waive all rights of subrogation against one another in respect of losses covered by the insurances required hereunder, and each Party shall procure a corresponding waiver from its insurers.
The Owner shall indemnify, defend, and hold harmless the Contractor, its Subcontractors, employees, agents, and representatives from and against any and all claims, demands, actions, losses, damages, costs, and expenses (including reasonable legal fees) arising out of or in connection with (i) any breach of this Agreement by the Owner, (ii) any pre-existing condition at the Site (including hazardous substances), (iii) any inaccuracy in the information supplied by the Owner, or (iv) any injury or damage caused by the Owner or persons under the Owner's control.
The Contractor shall indemnify, defend, and hold harmless the Owner from and against claims for bodily injury or death of its personnel, or physical damage to tangible property of third parties, to the extent proximately caused by the negligent acts or omissions of the Contractor in the performance of the Works, save to the extent caused or contributed to by the Owner or any third party not under the Contractor's control.
Save as expressly provided herein, each Party's liability to the other shall be limited and governed by the warranty and limitation of liability provisions set forth elsewhere in this Agreement.
Risk of Loss and Title to Materials
Risk of loss or damage to the Works, the Site, and any materials and equipment incorporated or to be incorporated into the Works shall pass to and remain with the Owner from the Effective Date onwards, save in respect of loss or damage proximately caused by the Contractor's negligence or willful misconduct and not covered by insurance.
Title to all materials and equipment properly incorporated into the Works shall pass to the Owner upon incorporation, or, if earlier, upon payment therefor as an Allowable Cost.
Title to materials and equipment delivered to the Site but not yet incorporated into the Works shall pass to the Owner upon the earlier of (i) delivery to the Site, or (ii) payment therefor by the Owner, provided that risk of loss shall in all events be borne by the Owner from delivery to the Site onwards, subject to the Contractor's obligation to take reasonable care thereof.
Notwithstanding the passing of title and risk, the Contractor shall take reasonable precautions to protect materials, equipment, and the Works in progress from loss and damage, consistent with sound construction practice.
In the event of loss of or damage to the Works or any materials or equipment at the Site, the Owner shall promptly make a claim upon its property or builder's risk insurance, and shall apply the proceeds thereof towards reinstatement; the Contractor shall perform such reinstatement works as a varied Scope of Work pursuant to a Change Order.
The Owner shall not remove, use, or otherwise appropriate any materials or equipment delivered to the Site prior to incorporation into the Works without the Contractor's prior written consent.
The Contractor's tools, plant, equipment, and other items brought to the Site for use in connection with the Works, but not intended to be incorporated into the Works, shall at all times remain the property of the Contractor and shall be at the Contractor's risk.
Delays, Force Majeure and Extensions of Time
Neither Party shall be liable for any failure or delay in the performance of its obligations hereunder (other than the payment of money) to the extent that such failure or delay is caused by Force Majeure, provided that the affected Party gives prompt written notice to the other Party of the occurrence and expected duration of the Force Majeure event.
Force Majeure shall include, without limitation: acts of God; natural disasters; fire; flood; earthquake; severe adverse weather beyond that reasonably to be expected at the Site; war; armed conflict; terrorism; civil commotion; riot; strike, lockout, or other labor disturbance (other than one confined to the Contractor's own workforce); epidemic, pandemic, or quarantine restriction; governmental or regulatory action, order, or embargo; shortage or unavailability of materials, labor, or transportation not caused by the affected Party's default; and any other event beyond the reasonable control of the affected Party.
In the event of Force Majeure, the Contractor shall be entitled to a Change Order granting an extension of time equivalent to the period of delay and reimbursing the Contractor as Allowable Costs for the additional costs incurred by reason of the Force Majeure.
The Contractor shall likewise be entitled to an extension of time, together with reimbursement of consequent costs, in respect of any delay caused by (i) the Owner, (ii) a Change Order, (iii) adverse Site conditions not reasonably foreseeable, (iv) delayed response to submittals, (v) suspension of the Works by order of any competent authority (not arising from the Contractor's default), or (vi) any other matter beyond the Contractor's reasonable control.
Should Force Majeure continue for a period in excess of [Number] consecutive days, either Party may, by written notice to the other, terminate this Agreement, in which event the Contractor shall be entitled to payment for all Allowable Costs incurred and the Contractor's Fee accrued thereon up to the date of termination, together with reasonable costs of demobilization.
Each Party shall use commercially reasonable endeavors to mitigate the effects of Force Majeure upon the performance of its obligations hereunder.
The passage of time for the performance of obligations shall be extended by a period equivalent to the Force Majeure delay, and completion of the Works shall likewise be deferred accordingly.
Suspension and Termination
The Owner may, by written notice to the Contractor, suspend the Works in whole or in part, provided that such suspension shall entitle the Contractor to (i) an extension of time equivalent to the period of suspension, (ii) reimbursement of all Allowable Costs incurred by reason of the suspension (including demobilization and remobilization costs, standby charges, and storage costs), and (iii) the Contractor's Fee thereon.
Should any suspension continue for a period in excess of [Number] consecutive days, the Contractor may, by written notice to the Owner, terminate this Agreement, and shall thereupon be entitled to payment as provided in the clauses dealing with termination for Owner default.
The Owner may terminate this Agreement for convenience at any time upon [Number] days' prior written notice to the Contractor, in which event the Contractor shall be entitled to (i) payment of all Allowable Costs incurred up to the effective date of termination, (ii) the Contractor's Fee accrued on such Allowable Costs, (iii) reasonable costs of demobilization and the termination of Subcontractor and supplier commitments, and (iv) a termination fee of [Percentage]% of the Contractor's Fee that would have been earned had the Works been completed in accordance with the Contractor's then-current estimate.
The Contractor may terminate this Agreement, by written notice to the Owner, in the event that (i) the Owner fails to pay any undisputed sum when due and such failure continues for [Number] days after written notice of default, (ii) the Owner commits any other material breach of this Agreement and fails to cure such breach within [Number] days after written notice thereof, (iii) the Owner becomes insolvent or subject to any bankruptcy, insolvency, or similar proceeding, or (iv) Force Majeure continues as provided above.
Upon termination by the Contractor pursuant to the preceding clause, the Contractor shall be entitled to the same compensation as upon termination for the Owner's convenience, together with such additional damages as may be allowed at law.
The Owner may terminate this Agreement, by written notice to the Contractor, only in the event that the Contractor (i) commits a material breach of this Agreement and fails to cure such breach within [Number] days after written notice thereof specifying the breach in reasonable detail, or (ii) becomes insolvent or subject to any bankruptcy, insolvency, or similar proceeding; in which event the Contractor shall be entitled to payment of all Allowable Costs incurred up to the effective date of termination, together with the Contractor's Fee thereon and reasonable demobilization costs.
Upon any termination of this Agreement, the Contractor shall promptly cease the Works, demobilize from the Site, and transfer to the Owner such materials, equipment, and work in progress for which the Owner has paid; the provisions hereof which by their nature are intended to survive termination (including without limitation warranty, indemnity, limitation of liability, confidentiality, and dispute resolution provisions) shall so survive.
Termination of this Agreement shall be without prejudice to any rights, remedies, or obligations which have accrued prior to the date of termination.
Governing Law and Dispute Resolution
This Agreement shall be governed by, and construed in accordance with, the laws of [Country/Jurisdiction], without regard to its conflict of laws principles.
In the event of any dispute, controversy, or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity, breach, or termination, the Parties shall first attempt to resolve the matter amicably through good-faith negotiations between senior representatives of each Party.
If the dispute is not resolved within [Number] days of written notice of dispute given by one Party to the other, the Parties shall endeavor to resolve the dispute by mediation administered by a mutually acceptable mediator in [City/Place], with each Party bearing its own costs and the costs of the mediator being shared equally.
If the dispute is not resolved by mediation within [Number] days after the appointment of the mediator (or such longer period as the Parties may agree), the dispute shall be finally settled by arbitration in accordance with the rules of [Arbitration Institution], by a sole arbitrator (or, where the amount in dispute exceeds [Amount], by three arbitrators) appointed in accordance with those rules.
The seat of arbitration shall be [City/Place], and the language of the arbitration shall be [Language]. The award rendered by the arbitrator(s) shall be final and binding upon the Parties and may be enforced in any court of competent jurisdiction.
Notwithstanding the foregoing, either Party may at any time apply to any court of competent jurisdiction for interim or conservatory measures, including injunctive relief, to protect its rights pending the outcome of the dispute resolution procedures herein.
Each Party shall continue to perform its obligations under this Agreement during the pendency of any dispute, save to the extent that performance is suspended or terminated in accordance with the express provisions hereof.
The prevailing Party in any dispute arising hereunder shall be entitled to recover its reasonable costs, including legal and expert fees, from the other Party, to the extent awarded by the tribunal.
Miscellaneous Provisions
This Agreement, together with any Change Orders and other written instruments executed by the Parties, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, negotiations, representations, and discussions, whether oral or written.
No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by duly authorized representatives of both Parties.
No failure or delay by either Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise preclude any other or further exercise of such right, power, or remedy.
If any provision of this Agreement is held by a court or tribunal of competent jurisdiction to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect, and the Parties shall negotiate in good faith to replace the invalid provision with a valid provision that most closely reflects the original intent of the Parties.
Neither Party may assign, transfer, or otherwise dispose of its rights or obligations under this Agreement without the prior written consent of the other Party, save that the Contractor may freely assign its rights to receive payment hereunder to any financial institution.
All notices and other communications required or permitted hereunder shall be in writing and shall be delivered personally, sent by registered mail with acknowledgment of receipt, sent by courier of recognized standing, or sent by electronic mail (with confirmation of receipt) to the addresses set forth in this Agreement or such other address as either Party may designate by written notice to the other.
Nothing in this Agreement shall be deemed to constitute either Party as the partner, agent, joint venturer, or employee of the other, and neither Party shall have authority to bind the other except as expressly provided herein.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument; signatures delivered by electronic means (including scanned PDF and recognized electronic signature platforms) shall have the same force and effect as original signatures.
Each Party shall bear its own costs and expenses in connection with the negotiation, preparation, and execution of this Agreement, save as otherwise expressly provided herein.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the Effective Date first above written.
THE OWNER:
Signature: ____________________________
Name: [Owner Full Legal Name]
Address: [Owner Address]
Identification Number: [ID Number]
Date: ____________________________
THE CONTRACTOR:
[Contractor Full Legal Name]
Signature: ____________________________
Name: [Signatory Name]
Title: [Signatory Title]
Address: [Contractor Address]
Registration Number: [Registration Number]
Date: ____________________________
WITNESS (if required):
Signature: ____________________________
Name: [Witness Name]
Address: [Witness Address]
Date: ____________________________