These Terms and Conditions are hereby incorporated into the “Contract” or “Agreement” between Owner and Contractor.  Owner and Contractor, in consideration of the mutual covenants set forth herein, agree to be bound to this Agreement.

• PROGRESS AND COMPLETION.
  • Contract Time. The Contractor shall proceed with the Work in a reasonably expedient manner and shall complete the Work with a reasonable amount of time, which shall include increases in time for weather delays, Owner caused delays, or any other delays that are not caused by the Contractor.  Substantial commencement of the Work shall be the Contractor’s mobilization of its forces and equipment at the Project followed by the initiation of the actual on-site Work.
• CONTRACTOR’S RESPONSIBILITIES
  • Contractor shall supervise, inspect, and direct the Work.  Contractor shall be solely responsible for the means, methods, techniques, sequences, and procedures of construction.
  • Taxes. The Contractor shall pay sales, consumer, use and similar taxes for the Work provided by the Contractor that are legally enacted when bids are received or negotiations concluded.
  • Labor and Materials. Unless otherwise provided in the Contract, the Contractor shall provide and pay for labor, materials, equipment, tools, construction equipment and machinery, and other facilities and services necessary for proper execution and completion of the Work, whether temporary or permanent and whether or not incorporated or to be incorporated in the Work.  The Contractor shall enforce good order among the Contractor’s employees and other persons carrying out the Work. 
  • During the progress of the Work, Contractor shall keep the Project Site and other areas reasonably free from accumulations of waste materials, rubbish, and other debris. 
  • Safety and Protection. Contractor shall be responsible for initiating, maintaining and supervising all safety precautions and programs in connection with the Work.  Contractor shall comply with all applicable Laws and Regulations relating to the safety of persons or property, or to the protection of persons or property from damage, injury, or loss; and shall erect and maintain all necessary safeguards for such safety and protection. 
• OWNER’S RESPONSIBILITIES.
  • Information and Services. Any information or services to be provided by the Owner shall be provided in a timely manner so as not to delay the Work.
  • Project Site Information. The Contractor is entitled to rely on any information provided by the Owner about the Project or the Project Site. 
  • Building Permit, Fees And Approvals. Unless specifically stated otherwise elsewhere in the Contract, the Owner shall secure and pay for all other permits, approvals, easements, assessments and fees associated with the Contractor’s performance of the Work.
  • Access to Site. Owner shall make the site available to Contractor and assure rights of ingress and egress to and from the site for Contractor for performance of the Work, including areas for staging and lay down. 
• CONTRACT PRICE AND PAYMENT. Contractor shall be paid the total aforementioned Contract Price, which is a fixed price, subject to any adjustments pursuant to any change orders.  The Contract Price, less the down payment (if made), plus any change orders shall be paid to Contractor on the day that the Contractor completes the Work.

Any and all claims not expressly reserved in writing by the Owner with the making of final payment shall be waived except for claims relating to liens or similar encumbrances, or latent defects in the Work.

• Finance Charge. Any late payments shall accrue interest at a rate of eighteen percent (18%) per annum on the outstanding balance from the date that it is due and owing.
• Statutory Unconditional Release Forms. Upon satisfactory payment being made for any portion of the work performed, the Contractor, prior to any further payment being made, shall furnish to Owner a full and unconditional release from any potential lien claimant claim or mechanics lien authorized pursuant to Sections 8400 and 8404 of the Civil Code for that portion of the Work for which payment has been made.

• CHANGES IN THE CONTRACT PRICE AND CHANGE ORDERS. The Contractor shall be entitled to an increase in the Contract Price for any additions or revisions to the Work by Owner.  Contractor shall also be entitled to an increase in the Contract Price if it encounters any unforeseen difficulties in the performance of the Work that increase its costs to perform the Work.  The Contractor shall also be entitled to an increase in the Contract Price if the Owner unjustifiably delays the Contractor’s performance of the Work.  In such instances, Owner shall execute a change order increasing the Contract Price and/or Contract Time as appropriate.  Owner shall respond, in writing, to any proposed change order by Contractor within 3 days of receiving the change order.
  • Note About Extra Work and Change Orders. Extra Work and Change Orders become part of the contract once the order is prepared in writing and signed by the parties prior to the commencement of work covered by the new change order.  The order must describe the scope of the extra work or change, the cost to be added or subtracted from the contract, and the effect the order will have on the schedule of progress payments.

Owner may not require Contractor to perform extra or change-order work without providing written authorization prior to the commencement of work covered by the new change order.

Extra work or a change order is not enforceable against Owner unless the change order also identifies all of the following in writing prior to the commencement of work covered by the new change order:

(i) The scope of work encompassed by the order.

(ii) The amount to be added or subtracted from the Contract.

(iii) The effect the order will make in the progress payments or the completion date.

The Contractor’s failure to comply with the requirements of this paragraph does not preclude the Contractor’s recovery of compensation for work performed based upon legal or equitable remedies designed to prevent unjust enrichment.

• HAZARDOUS MATERIALS.

A Hazardous Material is any substance or material identified now or in the future as hazardous under any federal, state or local law or regulation, or any other substance or material that may be considered hazardous or otherwise subject to statutory or regulatory requirement governing handling, disposal or cleanup.  The Contractor shall not be obligated to commence or continue work until any Hazardous Material discovered at the Worksite has been removed, rendered or determined to be harmless by the Owner as certified by an independent testing laboratory and approved by the appropriate government agency.

If after the commencement of the Work Hazardous Material is discovered at the Worksite, the Contractor shall be entitled to immediately stop Work in the affected area.  The Contractor shall report the condition to the Owner and, if required, the government agency with jurisdiction.

The Contractor shall not be required to perform any Work relating to or in the area of Hazardous Material without written mutual agreement.

The Owner shall be responsible for retaining an independent testing laboratory to determine the nature of the material encountered and whether the material requires corrective measures or remedial action.  Such measures shall be the sole responsibility of the Owner, and shall be performed in a manner minimizing any adverse effects upon the Work.  The Contractor shall resume Work in the area affected by any Hazardous Material only upon written agreement between the Parties after the Hazardous Material has been removed or rendered harmless and only after approval, if necessary, of the governmental agency with jurisdiction.

If the Contractor incurs additional costs or is delayed due to the presence or remediation of Hazardous Material, the Contractor shall be entitled to an equitable adjustment in the Contract Price.

The Owner shall indemnify, defend, and hold harmless the Contractor, its subcontractors and sub-subcontractors, and the agents, officers, directors and employees of each of them, from and against all claims, damages, losses, costs and expenses, including but not limited to reasonable attorneys’ fees, costs and expenses incurred in connection with any dispute resolution process, arising out of or relating to the performance of the Work in any area affected by Hazardous Material.

• CONCEALED OR UNKNOWN SITE CONDITIONS.

If the Contractor encounters conditions at the Project Site that are (1) unknown or unforeseen subsurface conditions, including rock, groundwater, tree roots, utility lines, or poor soil bearing capacity; (2) subsurface or other physical conditions which differ from those indicated in the Contract; or (3) unusual or unknown physical or subsurface conditions which differ from conditions ordinarily encountered in the Work provided for in the Contract, the Contractor shall notify the Owner of the condition.  In any such instance, Contractor shall be entitled to an equitable increase in the Contract Price that compensates Contractor for any and all increased costs associated with such conditions and Owner shall execute a change order authorizing the increase.

Moreover, Contractor shall not be responsible for the discovery of any reasonably undetectable sewer line-tie-ins that Owner did not specifically identify for Contractor in writing.  If any such tie-ins are damaged or sealed, Contractor shall not be responsible for any repair or resulting damage.  Moreover, in the event that the tie-ins result in additional work for Contractor, Contractor shall be entitled to an equitable increase in the Contract Price that compensates Contractor for any and all increased costs associated with such conditions.

• LIMITATION OF CONTRACTOR’S LIABILITY. THIS PROVISION EXPRESSLY LIMITS CONTRACTOR’S LIABILITY RELATING TO THE WORK, INCLUDING, BUT NOT LIMITED TO, CONTRACTOR’S LIABILITY FOR ACTIVE OR PASSIVE NEGLIGENCE.  

OWNER UNDERSTANDS AND AGREES THAT IN THE EVENT CONTRACTOR BREACHES ANY OBLIGATION OR DUTY, IN CONTRACT OR TORT, RELATING TO CONTRACTOR’S PERFORMANCE OF THE WORK, OR ANY OTHER SERVICE, AND OWNER EXPERIENCES ANY RESULTING DAMAGE OR LOSS, THEN CONTRACTOR’S TOTAL LIABILITY TO OWNER (INCLUDING THAT OF ITS OFFICERS, AGENTS AND EMPLOYEES), INCLUDING BUT NOT LIMITED TO LIABILITY FOR NEGLIGENCE CLAIMS, SHALL NOT EXCEED AND SHALL BE STRICTLY LIMITED TO THE AMOUNT OF THE CONTRACT PRICE UNDER THIS CONTRACT. 

• SUBCONTRACTORS. The Contractor shall be entitled to utilize subcontractors for the performance of any component of the Work.  Contractor shall be fully responsible for all acts and omissions of its Subcontractors and suppliers and of persons and organizations directly or indirectly employed by them.  Nothing in the Contract shall create any contractual relationship between Owner and any Subcontractor or supplier or other person or organization having a subcontract with Contractor, nor shall it create any obligation on the part of Owner to pay or to see to the payment due any Subcontractor, supplier, or other person or organization, except as may otherwise be required by law. 
• NOTIFICATIONS RELATING TO INSURANCE. Contractor maintains the following insurance coverage. 
• Worker’s Compensation
• Commercial General Liability Insurance
• Commercial Automobile Liability Insurance
  • Worker’s Compensation and Employer’s Liability Insurance. Contractor carries worker’s compensation insurance for all employees. 
  • Commercial General Liability Insurance. Contractor carries commercial general liability insurance written by Financial Pacific Insurance Company.  You may call Financial Pacific Insurance Company at 319-399-5700 to check on Contractor’s insurance coverage. 
  • Commercial Automobile Liability Insurance. Contractor carries automobile insurance for all of its vehicles. 
• TERMINATION.

In the event that the Agreement is “terminated” under this section, all provisions of this Agreement, that by their nature survive final acceptance of the Work, shall remain in full force and effect after such termination.

• Termination by the Contractor. The Contractor may terminate the Agreement under any of the following circumstances:
  • If the Work is stopped for a period of 10 consecutive days through no act or fault of the
  • Issuance of an order of a court or other public authority having jurisdiction that requires all Work to be stopped.
  • An act of government, such as a declaration of national emergency that requires all Work to be stopped.
  • Because the Owner has failed to make a required payment to the Contractor within the time stated in the Contract; or
  • Owner is otherwise is guilty of substantial breach of a material provision of the Contract.

If one of the reasons described above exists, the Contractor may, upon three days’ written notice to the Owner, terminate the Agreement and recover from the Owner payment for Work executed, including reasonable overhead and profit, costs incurred by reason of such termination, and damages including lost profits and overhead on any Work that was not completed.

• GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
• ATTORNEYS’ FEES. If either party commences an action in connection with any dispute arising out of, or in connection with, the Contract, the prevailing party in any such action shall be entitled to recover its attorneys’ fees and costs of suit.
• MECHANIC’S LIEN WARNING.

MECHANICS LIEN WARNING: Anyone who helps improve your property, but who is not paid, may record what is called a mechanics lien on your property. A mechanics lien is a claim, like a mortgage or home equity loan, made against your property and recorded with the county recorder.

Even if you pay your contractor in full, unpaid subcontractors, suppliers, and laborers who helped to improve your property may record mechanics liens and sue you in court to foreclose the lien. If a court finds the lien is valid, you could be forced to pay twice or have a court officer sell your home to pay the lien. Liens can also affect your credit.

To preserve their right to record a lien, each subcontractor and material supplier must provide you with a document called a ‘Preliminary Notice.’ This notice is not a lien. The purpose of the notice is to let you know that the person who sends you the notice has the right to record a lien on your property if he or she is not paid.

BE CAREFUL.  The Preliminary Notice can be sent up to 20 days after the subcontractor starts work or the supplier provides material. This can be a big problem if you pay your contractor before you have received the Preliminary Notices.

You will not get Preliminary Notices from your prime contractor or from laborers who work on your project. The law assumes that you already know they are improving your property.

PROTECT YOURSELF FROM LIENS.  You can protect yourself from liens by getting a list from your contractor of all the subcontractors and material suppliers that work on your project. Find out from your contractor when these subcontractors started work and when these suppliers delivered goods or materials. Then wait 20 days, paying attention to the Preliminary Notices you receive.

PAY WITH JOINT CHECKS.  One way to protect yourself is to pay with a joint check. When your contractor tells you it is time to pay for the work of a subcontractor or supplier who has provided you with a Preliminary Notice, write a joint check payable to both the contractor and the subcontractor or material supplier.

For other ways to prevent liens, visit CSLB’s Internet Web site at www.cslb.ca.gov or call CSLB at 800-321-CSLB (2752).

REMEMBER, IF YOU DO NOTHING, YOU RISK HAVING A LIEN PLACED ON YOUR HOME. This can mean that you may have to pay twice, or face the forced sale of your home to pay what you owe.

• INFORMATION ABOUT THE CONTRACTORS’ STATE LICENSE BOARD (CSLB). CSLB is the state consumer protection agency that licenses and regulates construction contractors.

Contact CSLB for information about the licensed contractor you are considering, including information about disclosable complaints, disciplinary actions, and civil judgments that are reported to CSLB.

Use only licensed contractors. If you file a complaint against a licensed contractor within the legal deadline (usually four years), CSLB has authority to investigate the complaint. If you use an unlicensed contractor, CSLB may not be able to help you resolve your complaint. Your only remedy may be in civil court, and you may be liable for damages arising out of any injuries to the unlicensed contractor or the unlicensed contractor’s employees.

For more information:

• Visit CSLB’s Internet Web site at www.cslb.ca.gov
• Call CSLB at 800-321-CSLB (2752)
• Write CSLB at P.O. Box 26000, Sacramento, CA 95826.