The Construction Contracts Act 2013 (the "Act") was enacted on 29 July 2013. This is going to have a major impact on the Irish construction industry and the approach to both payment and dispute resolution in the industry will be radically different when it is commenced. This Act applies to construction contracts entered into after such day as the Minister for Public Expenditure and Reform may by order appoint so will not apply until a commencement order is made.
The extent of the impact should not be underestimated and there are many potential pitfalls for the unwary. When equivalent legislation was introduced in the UK there was a lot of upheaval in the industry.
There is no doubt that this legislation will give rise to many queries; some of which are discussed below. One disadvantage, in comparison with the UK, is that Ireland has no specialist construction court to answer the many queries that will arise.
This note is based on the most recent version of the Bill available but it is possible that the Act, when finally published, may contain some minor differences. This note reviews:
the applicability of the Act; the impact on the payment regime; and the impact on dispute resolution. Applicability of the Act
The Act will apply to all construction contracts entered into after a particular date - the date has not yet been confirmed. It will not apply to contracts entered into before that date or projects that have started construction before that date (even if the contract has not been signed).
The concept of a "construction contract" is very broadly defined and relates to virtually every conceivable form of construction operation (including construction, alteration, repair, maintenance, extensions and demolition or dismantling).
The legislation also applies to all contracts which are ancillary to a "construction contract". The legislation will, therefore, apply to:
Main contracts; Sub-contracts; Sub-sub-contracts; Architectural appointments; Project manager appointments; Quantity surveying appointments; Engineering appointments; Archaeological appointments; Interior and exterior decorating appointments; Landscaping appointments. This is not an exhaustive list.
The Act will not apply to any of the following activities in the construction area:
Construction contracts with a value of less than 10k; Construction contracts for a private dwelling with a floor area of less than 200m2 where the person intending to live in the dwelling is party to the contract; Contracts for the supply of materials, equipment, components, plant or machinery only. It is important to note that you cannot opt out of the legislation. If the contract meets the criteria in the Act then it automatically applies.
If the contract does not include...