Labour contracting in the construction field involves hiring external firms or individuals to provide specialised labour for a project. These contractors handle specific tasks or trades, such as plumbing or electrical work, under agreed terms and conditions. This approach helps construction companies manage workforce needs efficiently, access specialised skills, and control costs.
LABOUR-ONLY AGREEMENT (COST-PLUS-PERCENTAGE-FEE)
CONTRACTOR’S NAME:
ADDRESS:
PHONE:
FAX:
E-MAIL:
LIC No:
DATE:
OWNER’S NAME:
ADDRESS:
PROJECT ADDRESS:
I. PARTIES
This contract (hereinafter referred to as “Agreement”) is made and entered into on this _______ day of _________ , 20 ___ , by and between __________________________ , (hereinafter referred to as “Owner”); and ___________________________, (hereinafter referred to as “Contractor”). In consideration of the mutual promises contained herein, Contractor agrees to perform the following work, subject to the terms and conditions below:
II. GENERAL SCOPE OF WORK DESCRIPTION
Contractor agrees to furnish labor only (no materials of any kind whatsoever) to complete the following work:
(Additional Scope of Work page(s) attached: _____ Yes _____ No)
III. GENERAL CONDITIONS FOR THE AGREEMENT ABOVE
A. CONTRACTOR’S DUTIES
Contractor acknowledges and accepts the relationship of trust implicit in this Construction Agreement. The Contractor agrees to use good efforts, judgment, and skills to complete the work according to the Contract Documents referred to in this Agreement. Contractor agrees to furnish competent construction management and administration and to adequately supervise the work in progress. Contractor agrees to complete the work in a timely and workmanlike manner.
Contractor represents and warrants the following to Owner:
1. Contractor is financially solvent.
2. Contractor is able to furnish the tools and labor required to complete the work and perform its obligations hereunder and has sufficient experience and skills to do so.
3. Contractor shall furnish only skilled and properly trained staff for the performance of the work. Contractor will submit a “Rate Schedule for Contractor’s Personnel” (see Section III.H., below) which states the name and total hourly rate charged for each worker who will work on this project as an employee of Contractor.
B. CONTRACT DOCUMENTS
The Contract Documents consist of the following documents which are hereby incorporated by reference into this Agreement:
1. This Agreement.
2. Any plans, specifications, or addenda referred to in the General Scope of Work section above.
3. Other:_______________________________________
C. EXCLUSIONS
This Agreement does not include materials of any kind whatsoever. This Agreement does not include labor for the following work:
1. PROJECT-SPECIFIC EXCLUSIONS:
2. STANDARD EXCLUSIONS: Unless specifically included in the “General Scope of Work” section above, this Agreement does not include labor or materials for the following work: Plans, engineering fees, or governmental permits and fees of any kind. Additional work required by governmental plan checkers on final “Red Lined” Job Copy of plans that are yet to be issued. Testing, removal and disposal of any materials containing asbestos (or any other hazardous material as defined by the EPA). Custom milling of any wood for use in project. Moving Owner’s property around the site. Labor or materials required to repair or replace any Owner-supplied materials. Repair of concealed underground utilities not located on prints or physically staked out by Owner which are damaged during construction. Surveying that may be required to establish accurate property boundaries for setback purposes (fences and old stakes may not be located on actual property lines). Final construction cleaning (Contractor will leave site in “broom swept” condition). Landscaping and irrigation work of any kind. Temporary sanitation, power, or fencing. Removal of soils under house in order to obtain 18 inches (or code-required height) of clear space between bottom of joists and soil. Removal of filled ground or rock or any other materials not removable by ordinary hand tools (unless heavy equipment is specified in Scope of Work section above), correction of existing out-of-plumb or out-of-level conditions in existing structure. Correction of concealed substandard framing. Rerouting/removal of vents, pipes, ducts, structural members, wiring or conduits, steel mesh which may be discovered in the removal of walls or the cutting of openings in walls. Removal and replacement of existing rot or insect infestation. Failure of surrounding part of existing structure, despite Contractor’s good faith efforts to minimize damage, such as plaster or drywall cracking and popped nails in adjacent rooms or blockage of pipes or plumbing fixtures caused by loosened rust within pipes; construction of a continuously level foundation around structure (if lot is sloped more than 6 inches from front to back or side to side, Contractor will step the foundation in accordance with the slope of the lot). Exact matching of existing finishes. Public or private utility connection fees. Repair of damage to roadways, driveways, or sidewalks that could occur when construction equipment and vehicles are being used in the normal course of construction. Cost of correcting errors and omissions by the owner’s design professionals and separate contractors. Cost of correcting/testing/remediating mold/fungus/mildew and organic pathogens unless caused by the sole and active negligence of contractor as a direct result of a construction defect that caused sudden and significant water infiltration into a part of the structure. Cost of removing ponding ground water or other unusual concealed site conditions during excavation. Extra costs associated with refusal of caisson drilling, cave-ins, etc. Cost to modify and/or remanufacture custom brackets and other custom-fabricated materials that are manufactured per plans and/or specifications but do not fit properly into the structure.
3. FEES FOR BUILDING PERMITS, PLANS, ENGINEERING & ARCHITECTURAL SERVICES, UTILITY CONNECTIONS, AND SPECIAL TESTING: This Agreement does not include the cost of coordinating or submitting for the permits, fees, and services referred to above. If Owner requests Contractor to coordinate any of these services or obtain any of the permits above, Contractor will perform this work on an hourly basis at the hourly rate of: $___________
Owner (not Contractor) is to enter into contracts for all of the above-mentioned services and provide direct payment to the people or agencies contracted with for all of the services and permit fees in the paragraph above.
If Owner requests that Contractor meet with Owner and architect or other design professionals to review the construction plans and specifications prior to completion of the final design documents, Contractor will perform this work on an hourly basis at the hourly rate of: $____________
4. SUPPLEMENTAL OWNER OBLIGATIONS: Owner agrees to purchase all materials, rental equipment, and incidental services required for the completion of Contractor’s work under this Agreement. No materials of any kind shall be purchased on the accounts of the Contractor. Owner will purchase both materials that will be fastened into the project (e.g., concrete and lumber, if applicable) and “consumable” materials required by Contractor to perform his work (e.g., saw blades, chalk, etc.).
Owner will pay for all debris removal (Contractor to leave debris in one pile on site), utilities, job-site sanitation (porta-potty), job-site power and water sufficient to perform Contractor’s work, and job-site telephone for local calls if the work will take more than two weeks to complete. Owner will pay for any rental equipment, incidental subcontractors (e.g., concrete pumpers and site contractors), and security measures reasonably required by Contractor to complete the work. At this time, Contractor expects the following security items, incidental subcontractors, and rental equipment to be required:
a.________________________________________________________
b.________________________________________________________
c.________________________________________________________
D. DATE OF WORK COMMENCEMENT AND SUBSTANTIAL COMPLETION
Commence work:____________________. Construction time through substantial completion: Approximately ____ to ____ weeks/months, not including delays and adjustments for delays caused by: holidays; inclement weather; accidents; shortage of labor or material; additional time required for Change Order and Additional Work; delays caused by Owner, Owner’s design professionals, agents, and separate contractors; and other delays unavoidable or beyond the control of the Contractor.
E. EXPIRATION OF THIS AGREEMENT
This Agreement will expire 15 days after the date at the top of page one of this Agreement if not accepted in writing by Owner and returned to Contractor within that time.
F. CONTRACTOR’S FEE
Owner will pay Contractor the Contract Sum consisting of the Cost of the Work as defined in Section III.H. of this Agreement, plus a fixed percentage fee of ___% of the cost of all Contract Work and Additional Work as compensation for Contractor’s profit and overhead.
G. PROGRESS PAYMENTS
Based upon applications for payment and all supporting documentation submitted to Owner by Contractor on Thursday of: ___ every week / ___every other week, Owner shall make a progress payment to Contractor as provided below on the following Friday of that week (the next day). The amount of each progress payment shall be calculated as follows and paid on or before the Friday following the date on which Contractor submitted the payment request/invoice:
Add up the total Cost of the Work as defined in Section III.H., below, which has been performed during the payment period, add the appropriate percentage of Contractor’s Fee, and the total of these two amounts will be due each Friday to Contractor.
H. COSTS TO BE REIMBURSED
Owner shall reimburse Contractor the Cost of the Work. The term “Cost of the Work” shall mean costs necessarily incurred by Contractor in good faith and in the proper performance of the work. The Cost of the Work shall include the items set forth in this section.
1. LABOR COSTS: Construction workers directly employed by Contractor to perform the construction work (“In-House Labor”) will be paid as established by the Rate Schedule for Contractor’s Personnel set forth below. This rate schedule is the gross amount to be charged for each worker and the Contractor (any and all applicable labor burden, medical and retirement benefits, bonuses, etc. have been factored into these rates).
RATE SCHEDULE FOR CONTRACTOR’S PERSONNEL:
WORKER RATE
A. ______________________________: $______ PER HR.
B. ______________________________: $______ PER HR.
C. ______________________________: $______ PER HR.
D. ______________________________: $______ PER HR.
E. ______________________________: $______ PER HR.
2. CONTRACTOR’S SUPERVISORY PERSONNEL: When Contractor or Contractor’s employee is performing both carpentry work and supervisory work, there shall be no duplication of payment for such labor (i.e., payment for both carpentry work and supervisory work at the same time).
Owner will be billed for Contractor or Contractor’s supervisory personnel performing off-site coordination activities or off-site job-related meetings directly related to the progress of the work. This off-site time billed to Owner shall not exceed __ hours per week unless the off-site meeting is requested by Owner, or otherwise as agreed to in writing by Owner and Contractor.
All accounting work and documentation preparation with payment applications is a direct job cost which will be performed at the rate of $_____ per hour. Accounting and documentation preparation work is guaranteed not to exceed ____ hours per payment application.
3. COST OF TIME SPENT PICKING UP MATERIALS AND MOBILIZING JOB: Time spent by Contractor and his employees at lumberyards and material supply houses (including travel time to and from) to pick up materials, and time required to move tools and equipment onto the job site at the start of the project and away from the site at the end of the project, is part of the Cost of the Work.
4. PROFIT AND OVERHEAD: Contractor’s profit and overhead at the rate of ___% will be charged on all labor included in the Rate Schedule for Contractor’s Personnel, above. The sum of the labor expenses in the above Rate Schedule and the profit and overhead on this labor amount will be the amount charged to Owner with each invoice from Contractor.
5. COSTS OF MATERIALS INCORPORATED INTO THE PROJECT: If Contractor purchases materials for the project due to Owner’s inability to have materials at the site when needed by Contractor, Owner agrees to immediately reimburse Contractor for the cost of these materials, plus profit and overhead on these materials at the rate of ___% if Contractor must purchase these materials on his own accounts.
6. EMERGENCY REPAIRS AND PRECAUTIONS: Taking action to prevent threatened damage, injury, or loss in case of an emergency which could affect the safety of persons and property on the site is part of the Cost of the Work.
I. COSTS NOT TO BE REIMBURSED BY OWNER
The following expenses shall not be reimbursed by owner:
1. Any general insurance costs and state and federal taxes of Contractor (e.g., worker’s compensation, comprehensive general liability insurance, auto insurance, health insurance, or labor burden expenses such as state and federal employer taxes, etc.). Contractor has factored these costs into the Rate Schedule for Contractor’s Personnel in Section III.H.1, above, or these costs will be paid out of Contractor’s profit and overhead percentage.
2. Travel time to and from the job site for Contractor and his employees. Costs associated with travel time such as: gas, vehicle maintenance, mileage payments, vehicle insurance, etc.
3. Costs to purchase, repair, and maintain Contractor’s tools, vehicles, and equipment.
4. Cellular phone charges (unless specifically agreed to in writing by Owner and Contractor).
J. WORK PERFORMED BY OWNER OR OWNER’S SEPARATE CONTRACTORS AND MATERIALS FURNISHED BY OWNER
Owner is responsible for supervising all of Owner’s separate contractors. Contractor has no duty to supervise or coordinate Owner’s separate contractors. Owner is responsible for verifying suitability and conformity of all materials he furnishes prior to their delivery to the job site.
K. CHANGES IN THE WORK AND PERSONS AUTHORIZED TO ORDER CHANGES
1. PEOPLE AUTHORIZED TO MAKE DESIGN DECISIONS AFFECTING THE COST OF THE WORK: The following people are authorized to make design decisions which affect the Cost of the Work:
_____________________________
_____________________________
(Please fill in line(s) above at time of signing Agreement)
2. CHANGES IN THE WORK AND ADDITIONAL CONTRACTOR’S FEE: During the course of the work, Owner may request Contractor to perform Additional Work not contemplated by this Agreement at the time this Agreement was entered into by the parties. Owner may also alter the selection of products or building design. For all Additional Work required or authorized by Owner, Owner will pay Contractor the Cost of the Work as defined in Section III.H. of this Agreement, plus a fixed percentage fee of ___% as compensation for Contractor’s profit and overhead on the Additional Work.
L. MISCELLANEOUS CONDITIONS
1. OWNER COORDINATION WITH CONTRACTOR: Owner agrees to promptly furnish Contractor with all details and decisions about unspecified construction finishes, and to consent to or deny changes in the Scope of Work that may arise so as not to delay the progress of the Work. The cost of any delays in furnishing design decisions after construction has commenced will increase the contract amount consistent with any additional costs incurred by Contractor. Delays in furnishing design decisions after construction has commenced will also increase the contract time. Owner agrees to furnish Contractor with continual access to the job site.
2. INTEREST CHARGES: Interest in the amount of ___% per month will be charged on all late payments under this Agreement. “Late Payments” are defined as any payment not received within ___ days of receipt of invoice from Contractor.
3. CONTRACTOR NOT TO BE RELIED UPON AS ARCHITECT, ENGINEER, OR DESIGNER: Contractor is not an architect, engineer, or designer. Contractor is not being hired to perform any of these services. To the extent that Contractor makes any suggestions in these areas, Owner acknowledges and agrees that Contractor’s suggestions are merely options that Owner may want to review with the appropriate design professional for consideration. Contractor’s suggestions are not a substitute for professional engineering, architectural, or design services, and are not to be relied on as such by Owner. Contractor is not responsible for ascertaining whether details in Owner’s plans conform to all applicable building and planning codes. Contractor is not responsible for the cost of correcting errors and omissions by Owner’s design professionals and separate contractors.
4. LIEN RELEASES: Upon request by Owner, Contractor and Subcontractors will issue appropriate lien releases prior to receiving final payment from Owner.
M. WORK STOPPAGE AND TERMINATION OF CONTRACT FOR DEFAULT
Contractor shall have the right to stop all work on the project and keep the job idle if payments are not made to Contractor strictly in accordance with the Payment Schedule in this Agreement, or if Owner repeatedly fails or refuses to furnish Contractor with access to the job site and/or product selections or information necessary for the advancement of Contractor’s work. Simultaneous with stopping work on the project, the Contractor must give Owner written notice of the nature of Owner’s material breach of this Agreement and must also give Owner a 14-day period in which to cure this breach of contract. Owner to follow this same notice procedure with Contractor if Owner alleges Contractor is in material breach of this Agreement.
If work is stopped due to any of the above reasons (or for any other material breach of contract by Owner) for a period of 14 days, and Owner has failed to take significant steps to cure his default, then the Contractor may — without prejudicing any other remedies Contractor may have — give written notice of termination of the Agreement to Owner and demand payment for all completed work and materials ordered through the date of work stoppage, and any other reasonable loss sustained by the Contractor, including Contractor’s Profit and Overhead at the rate of ____% on the balance of the incomplete work under the Agreement. Thereafter, Contractor is relieved from all other contractual duties, including all Punch List and warranty work.
N. DISPUTE RESOLUTION AND ATTORNEY’S FEES
Any controversy or claim arising out of or related to this Agreement involving an amount less than $5,000 (or the maximum limit of the Small Claims court) must be heard in the Small Claims Division of the Municipal Court in the county where the Contractor’s office is located. Any dispute over the dollar limit of the Small Claims Court arising out of this Agreement shall be submitted to an experienced private construction arbitrator that shall be mutually selected by the parties to conduct a binding arbitration in accordance with the arbitration laws of the state where the project is located. The arbitrator shall be either a licensed attorney or retired judge who is familiar with construction law. If the parties can not mutually agree on an arbitrator within 30 days of written demand for arbitration, then either of the parties shall submit the dispute to binding arbitration before the American Arbitration Association in accordance with the Construction Industry Rules of the American Arbitration Association then in effect. Judgment upon the award may be entered in any Court having jurisdiction thereof.
The prevailing party in any legal proceeding related to this Agreement shall be entitled to payment of reasonable attorney’s fees, costs, and post-judgment interest at the legal rate.
O. INSURANCE
Owner shall pay for and maintain “Course of Construction” or “Builder’s Risk” or any other insurance that provides the same type of coverage to the Contractor’s work in progress during the course of the project. It is Owner’s express responsibility to insure dwelling and all work in progress against all damage caused by fire and Acts of God such as earthquakes, floods, etc.
P. WARRANTY
Thank you for choosing our company to perform this work for you. Your satisfaction with our work is a high priority for us, however, not all possible complaints are covered by our warranty. Contractor does provide a limited warranty against material defects on all Contractor- and subcontractor-supplied labor and materials used in this project for a period of one year following Substantial Completion of all work. This warranty covers normal usage only. You must contact the Contractor at the address on page one of this Agreement in writing for warranty service immediately upon discovering an item in need of warranty service. If the matter is urgent, you must also call the Contractor and send written notice of the need for warranty service. Failure to notify the Contractor of the need for warranty service within ten days of discovery of a warranty item may void this warranty. Additionally, Owner’s hiring of others or direct actions by Owner or Owner’s separate contractors to repair a warranty item are not covered by this warranty and will not be reimbursed by Contractor.
No warranty is provided by Contractor on any materials furnished by the Owner for installation. No warranty is provided on any existing materials that are moved and/or reinstalled by the Contractor within the dwelling or the property (including any warranty that existing/used materials will not be damaged during the removal and reinstallation process). One year after Substantial Completion of the project, the Owner’s sole remedy (for materials and labor) on all materials that are covered by a manufacturer’s warranty is strictly with the manufacturer, not with the Contractor.
Repair of the following items and related damages of every kind are specifically excluded from Contractor’s warranty: problems caused by lack of Owner maintenance; problems caused by Owner abuse, owner misuse, vandalism, owner modification or alteration; and ordinary wear and tear. Damages resulting from mold, fungus, and other organic pathogens are excluded from this warranty unless caused by the sole and active negligence of contractor as a direct result of a construction defect which caused sudden and significant amounts of water infiltration into a part of the structure. Deviations that arise such as the minor cracking of concrete, stucco, and plaster; minor stress fractures in drywall due to the curing of lumber; warping and deflection of wood; shrinking/cracking of grouts and caulking; fading of paints and finishes exposed to sunlight are all typical (not material) defects in construction and are strictly excluded from Contractor’s warranty.
THE EXPRESS WARRANTIES CONTAINED HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, HABITABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE. THIS LIMITED WARRANTY EXCLUDES CONSEQUENTIAL, INCIDENTAL, AND SPECIAL DAMAGES AND LIMITS THE DURATION OF IMPLIED WARRANTIES TO THE FULLEST EXTENT PERMISSIBLE UNDER STATE AND FEDERAL LAW. SOME STATES RESTRICT LIMITATIONS ON VARIOUS WARRANTIES AND SO A CONSUMER’S RIGHTS UNDER THIS WARRANTY MAY VARY. THIS LIMITED WARRANTY MAY NOT BE VERBALLY MODIFIED BY ANY PERSON. THIS LIMITED WARRANTY IS GOVERNED BY THE LAWS OF THE STATE WHERE THE WORK WAS PERFORMED.
Q. ENTIRE AGREEMENT, SEVERABILITY, AND MODIFICATION
This Agreement represents and contains the entire agreement and understanding between the parties. Prior discussions or verbal representations by Contractor or Owner that are not contained in this Agreement are not a part of this Agreement. In the event that any provision of this Agreement is at any time held by a Court to be invalid or unenforceable, the parties agree that all other provisions of this Agreement will remain in full force and effect. Any future modification of this Agreement should be made in writing and executed by Owner and Contractor.
R. ADDITIONAL LEGAL NOTICES REQUIRED BY STATE OR FEDERAL LAW
See page(s) attached: ____ Yes; ____ No
S. ADDITIONAL TERMS AND CONDITIONS
See page(s) attached: ____ Yes; ____ No
I have read and understood, and I agree to, all the terms and conditions contained in the Agreement above.
_________ ______________________
DATE CONTRACTOR’S SIGNATURE
_________ ______________________
DATE OWNER’S SIGNATURE
_________ ______________________
DATE OWNER’S SIGNATURE