Construction Agreement

What Is a Construction Agreement?

A construction agreement is a written contract that outlines mutual rights and obligations of the parties to a construction project. This document helps to avoid misunderstanding between the parties by clearly defining the scope of work, payment terms, duration of a project, and other important provisions.  The template is available in PDF and Word formats, fully customizable for all states, and suitable for residential, commercial, renovation, and subcontracting work.

The parties involved in a construction agreement template are a client and a contractor or a builder. A client is a customer who wishes to order certain construction works to renovate, demolish, or expand the existing building or construct the new one. A builder is a licensed independent contractor or a business that has the necessary skills and permits to perform construction work.

What’s included in the Construction Agreement Template?

A well-drafted sample construction contract agreement must include the following terms and conditions:

Identification of Parties

The text of a contract must reflect the full names, addresses, and contact details of the contractor and client. The same parties should sign the document to make it legally valid.

If either party is a company, in that case a company’s representative shall sign the contract. A company’s representative is usually a director or CEO who is in charge of handling contractual matters.

Scope of Work

Inclusion of a detailed scope of work into the construction contract agreement is an essential step. The client could be sure that upon completion of work they will get the desirable result. The contractor The contractor knows that the client cannot ask for more work to be done as well as helps to avoid a scope creep.

Another important element to consider is who shall deliver materials and labor for the construction works. It could be a client, contractor, or both parties, depending on the type of project. If a contractor provides all materials, a construction contract agreement shall address if the price of materials is included in the price of work or not. Finally, the list of all agreed materials, including their quality and quantity, should be listed in the text of a separate addendum to the contract.

Building Schedule

Another key element a construction agreement sample should have is a building schedule. Time is of the essence for this type of contract. Thus, the building schedule must define:

• name of a milestone and its final deliverable; and
• deadline for each milestone.

Usually a solid building schedule is necessary for complex construction works, including building a new property from scratch or its complete demolition. However, for a simple house construction contract agreement, parties may agree on a final deadline for the whole project.

Fees and Payment Schedule

A solid sample construction contract agreement has to define how much and when the client has to pay for the performed construction work. There are several payment options a client may pick from:

• a fee per completed milestone;
• a fixed fee for the whole project; or
• multiple payments according to the agreed payment schedule.

It is also common to include late fees in the construction agreement template. Once the client fails to make a payment in full or its part on time, late fees shall apply. In any case failure to make a payment by the due date is considered a serious breach of a contract.

Changes to Work

It may happen that the client wants to change the project in full or in part. Thus, a solid sample construction contract agreement shall define mutual parties’ rights and obligations in this regard.

The text of a contract shall define that the client undertakes to cover all additional expenses related to the changes. The introduction of work changes should be made as a written addendum and signed by both parties. After its signing, the addendum becomes an integral part of the contract.

Licensing and Permits

Despite the completion of a project, even a simple construction agreement must include the following warranties and representations of a contractor:

• that there is a valid building or construction license in place;
• that there is a professional insurance covering the contractor against the risk of death or injury of personnel involved in construction work;
• that the works should be performed in accordance with federal safety requirements; and
• that a contractor has relevant professional experience to perform work under the contract.

Why Is It Important to Use a Written  Construction Agreement Template?

Having a written construction agreement prevents disputes between the parties. Besides that, verbal agreements usually lead to inconsistent interpretation of previous arrangements. Therefore, it is always a better idea to fix everything on the paper.

A written construction agreement has the following benefits:

• clarifies the scope of work to be done and prevents “scope creep”;
• fixes financial obligations of a client; and
• serves as a legal shield for both parties in case of a dispute.

How to Download the Construction Agreement Template?

To get your fully customized sample of contract agreement for construction, follow a few easy steps below:

1. Click the “Create Document” button.
2. Answer simple questions in the form.
3. Select a template’s format—PDF or Word.
4. Make a payment.
5. Download, print, and instantly use the ready-made document.