Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

Section 3 deals with payments under the construction contract. Simple contracts can stipulate fixed amounts to be paid at stages, such as the completion of foundations, external walls, roofs, etc. Larger contracts allow for a fixed period between each interim payment. Typically, such payments are monthly. However, the amounts associated with interim payments are not stipulated but are based on progress on site and are tied to rates for elements of the work.

In addition, some contracts may not have a final payment at contract award stage but instead the final payment or total contract sum may not be fully computed until a substantial amount of the work is completed. Such contracts may have a tendered contract sum which both parties are aware is subject to change depending on the actual extent of work completed and the final contract sum is calculated on a re-measurement of the completed work. Deleting line 24 of section 3(1) would remove the discretion of parties to the contract to provide any flexibility under a construction contract and, if limited to section 3(1)(a) and (b), would only reflect the typical range of contracting arrangements.

I note the comments that section 3(1) and (2), which refer to adequate mechanism, may result in uncertainly but I suggest it is important to permit parties to make their own contractual arrangements. Under section 3(1) the parties can simply make arrangements for stage payments but this may be unsuitable in cases. Parties would be in a position to agree on how the stage payments would be calculated but it may be unduly restrictive to prevent this.

Obviously, if parties are allowed some leeway to make their own arrangements, this involves a value judgment on whether it is adequate but this may be a matter for the courts ultimately. Of course, it is a matter of policy whether to allow this flexibility.