The Construction Contracts Bill 2010: Overview

Author:Ms Niav O' Higgins and Tim Kinney
Profession:Arthur Cox
 
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On the 19th May, 2010, Independent Senator Feargal Quinn introduced the Construction Contracts Bill (the Bill) to Seanad Eireann (the Senate). The Bill was the result of discussions between the Senator and Mr Sean Gallagher, Chief Executive of Smarthomes, who had contacted Senator Quinn to highlight the problems with payment for sub-contractors in the construction industry. The Bill received Government support and has been taken up by the Department of Finance. It is also backed by the Construction Industry Federation, which had also been considering options for improving cash flow within the industry.

This note sets out a brief commentary on the key provisions contained in the Construction Contracts Bill 2010, as introduced by Senator Quinn. Commentary on the Bill has emphasised the need to ensure the principal provisions contained in the UK Housing Grants, Construction and Regeneration Act 1996 (as amended) (the "HGCR Act") are replicated here in Ireland. A real challenge, however, will be to ensure that the final Bill meets the specific requirements of the Irish construction sector. By way of background, the HGCR Act in the UK was born out of lengthy discussion and consultation, following concerns at the level of insolvency and financial difficulties experienced in the construction industry and the adverse impact, particularly on smaller contractors in this sector. This led to the publication of the Latham Report in the early 1990s, following which the HGCR Act was developed to address specific difficulties identified within the UK construction sector.

The main aim of the Bill is to improve payment practices within the construction industry, by providing for a range of statutory rights for contractors and sub-contractors, supported by the ability to refer disputes to a fast track adjudication process. The Construction Contracts Bill should not, however, be viewed as an alternative to undertaking appropriate due diligence of the project in which contractors are to be involved, the contract terms under which they are to perform work and/or provide services, and of the financial stability of the key players involved. Construction continues to be characterised by a degree of informality, where either no formal contract is entered into or the parties to those contracts do not avail of the contractual rights and remedies that may be available to them. There already exist alternative means by which financial security can be ensured (such as...

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