Construction law in Ireland is governed by common law and relevant legislation. The most pertinent statutory provisions are set out below.

Building Control Acts 1990–2021 (the “Building Control Acts”)

The Building Control Acts impose obligations to erect buildings in accordance with building regulations. The legal requirements designed to ensure the safety, health, and welfare of people in and around buildings are governed by the Building Control Acts and are enforced by the building control authorities. Under the Building Control Acts, the relevant government minister is entitled to make regulations relating to the construction of buildings. The Building Control Acts also set out penalties for those who are guilty of an offence under building regulations. 

Building Regulations 1997–2024 (the “Building Regulations”)

The Building Regulations, issued pursuant to the Building Control Acts, are a set of legal requirements designed to ensure the safety, health and welfare of people in and around buildings. Compliance with these regulations is mandatory for all new buildings, extensions, and significant alterations to existing buildings. The Building Regulations have twelve parts, as follows.

• structure;
• fire safety;
• site preparation and resistance to moisture;
• materials and workmanship;
• sound;
• ventilation;
• hygiene;
• drainage;
• heat producing appliances;
• stairways, ladders, ramps and guards;
• fuel and energy conservation; and
• access and use.

Each of these requirements to the regulations is supported by technical guidance documents. The guidance documents are non-statutory guides which provide a route to demonstrating prima facie compliance with the Building Regulations.

Building Control Regulations 1997–2025 (the “Building Control Regulations”)

The Building Control Regulations are in place to ensure effective public oversight of compliance with the Building Regulations, and include a mandatory procedure that, if followed correctly, supports compliance with the technical Building Regulations. The Building Control Regulations set out various certificates that must be lodged with a building control authority before the commencement of works and at completion. It is the responsibility of the owner of the works to ensure compliance, and any failure to do so can result in enforcement action by the building control authority or criminal liability. The Building Control Regulations also mandate certain statutory appointments which must be made by the building owner, including the appointment of an assigned certifier, design certifier, and a nominated builder.

Safety, Health and Welfare at Work (Construction) Regulations 2013

The Safety, Health and Welfare at Work (Construction) Regulations 2013 (the “Construction Regulations”) were introduced under the Safety, Health and Welfare at Work Act 2005 and govern the health and safety of construction activities. These regulations place specific duties on various parties involved in construction projects, including clients, designers, contractors and project supervisors. The person or entity procuring works is required to appoint competent project supervisors for both the design phase (the Project Supervisor for the Design Phase, or PSDP) and construction stages (the Project Supervisor for the Construction Stage, or PSCS).

The Construction Regulations require the allocation of resources for health and safety management and that a safety file be maintained and handed over upon completion. Failure to comply with the Construction Regulations can result in criminal penalties for the entity procuring the works.

Separately, Section 17 of the 2005 Act requires any person procuring the construction of works to appoint competent persons to ensure that the project is designed and constructed to be safe and without risk to health, both when built and when subsequently used. It is generally accepted that the appointment of a competent PSCS and PSDP satisfies an employer’s obligations as regards Section 17.

Construction Contracts Act 2013

The Construction Contracts Act 2013 (the CCA) was introduced to ensure fair and timely payment practices in the construction industry, reduce the risk of payment disputes, and improve cash flow for contractors. The CCA applies in both the public and private sectors to most construction contracts over EUR10,000 irrespective of whether the parties to the construction contract have selected the laws of another jurisdiction as the governing law. The CCA mandates that construction contracts include clear payment terms. If the contract does not specify payment terms, the CCA provides default payment terms. Payments must be made within 30 days of the payment claim date unless otherwise agreed. It is not possible to contract out of the CCA, and it will override any inconsistent payment terms. The CCA contains a statutory adjudication process for resolving payment disputes. This process is designed to be fast and cost effective, providing a binding decision within 28 days of the referral to adjudication. Either party can refer a payment dispute to adjudication at any time.

Public Sector Construction Contracts

For construction projects which are procured by public bodies, or where more than 50% of the cost of the project is funded by the exchequer, the government published public works forms of contract are generally required. These forms of contract also include the associated procurement documentation, in line with the requirements of European Union procurement law. Amendments are generally not permitted to the Public Works contracts, unless prior dispensation has been granted by the Government Construction Contracts Committee (GCCC).

The most commonly used public works contracts are:

• building/civil engineering works designed by the employer; and
• building/civil engineering works designed by the contractor (the “Public Works Contracts”).

Designers on public projects are generally engaged under the Standard Conditions of Engagement published by the GCCC used for the appointment of professional consultants.

Some observers find that the Public Works Contracts impose an excessively rigid framework and transfer a considerable portion of risk onto contractors. There has been a growing trend recently for public authorities to seek dispensations to adopt the NEC4 form of contract for public projects. This approach is frequently favoured because it promotes collaborative working relationships and encourages a more equitable distribution of risk.

Private Sector Construction Contracts

There is no mandatory form of contract for private-sector projects, and the choice of contract will largely be dependent upon the preference of the parties and the nature of the works.

RIAI Forms of Contract

The most prevalent standard-form contracts used are the following contracts published by the Royal Institute of the Architects of Ireland (RIAI):

• the blue form, which is a lump-sum contract where quantities do not form part of the contract; and
• the yellow form, which is a re-measurable contract (the “RIAI Contracts”).

In standard form, the RIAI Contracts are build-only contracts, and must be amended to be used for a design-and-build arrangement. The RIAI Contracts are often heavily revised based on a schedule of amendments.

International Forms of Contract

The following overseas forms of contract are also often used in Ireland.

• The yellow book, red book, and, to a lesser extent, silver book forms of contract produced by the International Consulting Engineers (FIDIC) (the “FIDIC Contracts”), particularly for large-scale infrastructure and energy projects.
• The forms of contract, both design-and-build and build-only contracts, issued by the UK’s Joint Contracts Tribunal (JCT), are often amended to be used for Irish projects, usually when either the employer or contractor is a UK-based entity familiar with these contract forms.
• The use of the New Engineering Contracts (NEC) produced by the UK Institution of Civil Engineers (“NEC Contracts”) is gaining traction in Ireland on both public and private projects due to these contracts’ focus on collaboration and cooperation. The NEC Contracts cater to engineering projects, but can also be adapted to cover building works. The contracts are considered collaborative, aiming to prevent costly disputes.

Private Sector Consultant Appointments

Most consultant appointments in the private sector are bespoke, but based on an industry standard form. On smaller-value projects, the Standard Condition of Engagement for Consultancy Contracts produced by Engineers Ireland is sometimes used.

The employer in a construction project in Ireland can be any of: i) a state body; ii) an incorporated entity; iii) an unincorporated entity; or iv) individual persons.

An employer’s typical duties are imposed both under statute and under the terms of the contract, and its obligations typically include the following.

• Producing or procuring the drawings and specifications or its requirements for the works.
• Paying the contractor for works it has carried out in line with the terms of the contract and the CCA.
• Complying with its obligations under the Construction Regulations, which include:
1. appointing a PSDP at or before the start of the design process;
2. appointing a PSCS before construction work begins; and
3. maintaining safety files and any information received in relation to them.
• Ensuring the works comply with the Building Regulations.
• Ensuring compliance with the Building Control Regulations, which will include:
1. appointing an assigned certifier, design certifier and nominated builder;
2. ensuring that all required certificates and notices are lodged with the relevant building control authority.
• Securing planning permission and any other permits required for the works.
• Granting possession of the site.
• Issuing instructions in a timely manner.

In general, an employer has the right to:

• the completion of the works for which the contractor has been paid;
• require the contractor to rectify any defects which arise during works;
• terminate the contract due to a breach or otherwise depending on the terms of the contract; and
• have the works completed by a specified date for completion.

Contracting Structure

The employer engages a contractor to carry out and complete works pursuant to the requirements of the building contract. Depending on the type of contract entered into, an employer may engage a design team which will remain responsible for the design of the works. Alternatively, the employer may engage the contractor as a design-and-build contractor, in which case the contractor will take on the design risk.

An employer often requires its written consent to be given prior to the appointment of any subcontractors and/or may provide an approved list of subcontractors. Building contracts usually hold the contractor liable to the employer for works carried out by its subcontractors. After the contractor engages the relevant subcontractors, direct legal relationships between the employer and subcontractors will usually be established through the provision of collateral agreements.

An employer will have a direct contract with a financier to facilitate the financing of a project (see 2.4. The Financiers).

Contractors in Ireland are typically incorporated building contracting companies or engineering companies.

A contractor’s typical duties include:

• carrying out the works, in accordance with the works specification or requirements provided by the employer;
• ensuring the works are built in accordance with the Building Regulations, free from defects and, where any defects become apparent, rectifying these;
• building the works in accordance with the agreed time frames;
• ensuring the works are built in accordance with the Building Regulations, free from defects and rectifying defects which become apparent;
• ensuring that the works are complete by the specified date for completion;
• if the contractor is appointed as the nominated builder for the purpose of the Building Control Regulations, which is typically the case, co-operating with the assigned certifier and issuing, or contributing to the issuing of, various certificates both during the works and at completion; and
• if the contractor is appointed as PSCS, which is usually the case, managing and co-ordinating health and safety matters during the construction stage.

Generally, the contractor has the right to:

• payment, in accordance with the terms of the contract and pursuant to the CCA;
• an extension of time to complete the works and/or adjustments to the contract price, upon the occurrence of specified events, as set out in the contract; and
• suspend the works pursuant to the terms of the CCA in the event of non-payment by the employer.

Contracting Structure

The contractual relationship between the employer and contractor arises out of the building contract. See 2.1 The Employer for further analysis on the relationships between an employer and contractor.

A contractor will engage subcontractors to work on a project (as required), as described in 2.3 The Subcontractors.

A contractor’s relationship with the design team will vary depending on the nature of the contract. If the contractor is responsible for works only, the contractor will generally not have any contractual relationship with the design team, but will often be required to co-ordinate and co-operate with the latter. A member of the design team will often be identified as the contract administrator of the building contract. If the contractor is a design-and-build contractor, it will either appoint the design team directly or the design team appointments will be novated from the employer to the contractor.

Often, contractors will have a direct contractual relationship with a financier through the provision of a collateral agreement, as described in 2.4 The Financiers, which a financier will usually need the employer to procure.

Entities performing subcontract works are typically incorporated entities or sole traders providing specialised services. A subcontractor will generally be one of several subcontractors appointed by a contractor for a project.

The particulars of the relationship between a contractor and subcontractor are usually delineated in a subcontract, and will be similar to a contractor’s rights and responsibilities with respect to the employer under a main contract. Contractors will typically try to pass down liabilities and obligations from the main contract to the subcontract.

Contracting Structure

Subcontractors do not have direct contractual relationships with the employer. However, it is often a requirement of a building contract that the contractor procures the execution of collateral agreements from specified subcontractors in favour of an employer to create a contractual relationship between the employer and subcontractor. Subcontractor collateral agreements typically provide for the possibility for an employer to step in to the subcontract in lieu of the contractor upon the termination of the contractor under the main contract, or where the subcontractor seeks to terminate the subcontract.

An employer may also have an element of control with respect to subcontracting under the main contract, which will often grant the employer approval rights over the appointment of subcontractors. Employers will sometimes nominate or specify subcontractors that the contractor is required to engage.

Depending on the obligations of the employer to its financier, the contractor may also be required to procure collateral agreements from certain subcontractors in favour of the financier, thereby creating a direct contractual relationship between the subcontractors and financier.

A subcontractor appointed by a contractor does not typically have any contractual relationship with design team members.

Funding of construction projects is generally obtained from domestic or international financial institutions or private equity funds. State and semi-state entities also fund key infrastructure and social housing projects.

A financier’s rights will originate from a financing agreement with the borrower (typically the employer). Financiers usually reserve the right to approve the form of building contract, design team appointments and other ancillary agreements. Under the financing agreements, the financier will typically take security over the works, other assets of the borrower and construction contracts to which the borrower is a party. A financier will often appoint a project monitor who will be entitled to attend various site meetings, receive progress reports, and monitor payments to the contractor and design team.

Contracting Structure

Financiers will have a direct contractual relationship with the borrower, usually the employer, through the finance documents. A financier will have no initial direct contractual relationship with the contractor, design team, and subcontractors, but the finance agreements will generally oblige the borrower to ensure that those parties enter into a collateral agreement with the financier, thereby creating a contractual nexus. The collateral agreements in favour of the financier typically provide step-in rights to the financier.

The design of projects in Ireland is usually prepared by incorporated entities of professional consultants but with certain elements of the works also designed by specialist subcontractors. Where a design-and-build contractor is engaged, it will take on primary responsibility for the design of a project.

A professional team in Ireland will usually be comprised of professional consultants appointed to carry out the design, as well as other entities appointed as assigned certifier and design certifier pursuant to the requirements of the Building Control Regulations and a PSDP pursuant to the requirements of the Construction Regulations.

Designers are generally required to:

• ensure the works are designed in accordance the Building Regulations and any planning permission;
• carry out the design using reasonable skill and care, or, occasionally, ensure that the design is fit for purpose;
• procure and maintain an agreed level of professional indemnity insurance for an agreed period following the completion of the works;
• execute and deliver to the assigned certifier all necessary certificates required under the Building Control Regulations;
• ensure that they do not specify any materials that are deleterious to the works; and
• prove that they own the intellectual property rights in their design, and provide the employer with a licence to use the design.

Contracting Structure

The relationship that designers have with the contractor and the employer will depend on the method of contracting used for a project. In a traditional contract, the employer appoints the design team, and the design team will have no contractual relationship with the contractor.

Where a design-and-build contract is used, the contractor will appoint the design team itself, or the design team will be engaged by the employer and novated to the contractor. In both scenarios, the designers will typically enter into a collateral agreement with the employer to ensure that the employer has a direct contractual link to the designers.

The scope sets out the list of works, materials and services to be provided and performed by the contractor. It will typically contain designs, drawings and specifications. In some contracts (eg, for engineering projects) the scope will specify performance outcomes which must be met, and these will be measured against specified performance metrics.

The aim of the scope is to obtain a mutual understanding of each parties’ obligations. In a design-and-build contract, the requirements for the works are sometimes framed in broader terms as the contractor will be ultimately responsible for the design of the works. In a construct-only contract, the employer sets out more detailed specifications to be provided by the contractor. The scope of works always forms part of the contract, and the contractor is required to build (and design, as applicable) in accordance with the scope. The scope of works is generally only subject to change by way of variations, or, occasionally, if there is a provision for design development during the project.

Under common law, unless there is an express contractual provision permitting the employer to vary the works, the employer is generally not entitled to instruct a variation without the contractor’s consent. Most construction contracts do permit an employer to instruct a variation. A variation under a construction contract is generally proposed by the employer, but a contractor generally also has the right to propose variations. Following a variation instruction, a contractor will often be required to provide the employer with a detailed assessment of the time, cost, and programme implications of the variation. The employer may agree to the extension of time and contract price adjustments proposed, in which case the variation will proceed on this basis. An employer may be entitled to instruct a variation in the absence of an agreement on costs, in which case the price may be valued as follows:

• by reference to rates in a pricing document;
• on the basis of rates for similar work in the locality at the time the variation is instructed; or
• on the basis of a fair and reasonable valuation.

Time-related costs are often evaluated by the rates for preliminaries and overheads included in a pricing document, or by reference to any agreed daily rate of delay cost.

The design and construction stages of the works can be combined or separated. Most works are carried out using the traditional method of contracting wherein the employer appoints and retains the design team. Under this method, the contractor does not take responsibility for the design except for any design carried out by its specialist subcontractors. 

Where a design-and-build contracting method is used, the contractor takes overall responsibility for both the design and construction of the project, including any design prepared by designers engaged by the employer who are then novated to the contractor.

During the construction of the works, the contractor is usually responsible for the management of the works including the provision of materials, resources, and subcontractors. On more sophisticated engineering projects, there might be multiple-package contractors appointed who are then managed by a construction manager on behalf of the employer. Employers’ responsibilities during the construction process are generally confined to providing clarifications on design specifications and providing access to the site.

A subcontractor will be responsible for its specific works package, with the contractor having overall responsibility for its subcontractors.

Unless a contract expressly provides otherwise, the common law position is that the contractor assumes responsibility for ground risk. The RIAI Contracts are silent on the issue, but the Public Works Contracts have an option for an employer to take some of the risk in relation to unforeseen ground conditions or to pass the entirety of the risk to the contractor.

Most employers will look to pass all responsibility for ground risk to the contractor. The employer might provide geotechnical surveys, and it is not uncommon for contractors to then seek to rely on these. This reliance can give rise to entitlements for extension of time relief and adjustments to the contract price if conditions that differ from those outlined in a survey are discovered. Other contracts may provide time and cost relief if unforeseeable ground conditions are discovered without reference to a survey. Employers often include a warranty to the effect that the contractor has had an opportunity to inspect the site.

Construction contracts often provide for an extension of time in favour of the contractor if the works are delayed due to an archaeological discovery.

An employer is responsible for securing planning permission for a project and ensuring that certificates required under the Building Control Regulations are filed, although the employer may engage professionals to carry these out on its behalf. The types of other licences required will be dictated by the nature of the project. Responsibility for the procurement of other necessary licences or permits is often governed by the terms of a building contract. The following are common permits required:

• crane oversail licence;
• for energy projects – grid connection agreement, licence to generate and authorisation to construct;
• waste licences; and
• road closing licence.

The contractor is responsible for the maintenance of the works until practical completion. This then transfers to the employer at completion.

Generally, post-completion maintenance obligations are not included in construction contracts. However, for engineering projects, the employer will often enter into a separate maintenance agreement with an EPC (Engineering, Procurement, and Construction) contractor to maintain the asset for a specified period following completion of the works.

Contractors are typically only engaged to carry out the construction, and sometimes the design, of a project. An employer may engage a project manager to manage the overall project and a separate entity to operate an asset once complete. However, these entities will rarely be instructed to assist with other functions, such as the procurement of finance. 

On most building projects, testing of specific elements of the works will be undertaken/overseen by the consultant for the relevant element and, if the tests are successfully passed, the consultant will inform the contract administer who, in turn, will issue the relevant completion certificate/payment certificate.

On more complex projects involving an engineering component and/or supply and installation works, procedures similar to those set out in FIDIC forms of contract will apply wherein a contractor must pass tests on completion. After this, the works are taken over, with further tests carried out.

Construction contracts will generally set out detailed criteria to be met for works to be certified as being complete or having reach practical completion. Practical completion will not occur unless the works can be taken over and used for their intended purpose except for any outstanding defects or snags of a trivial nature. Most contracts will also require the contractor to provide various documents at practical completion.

Takeover, as a separate process to completion, generally only occurs in contracts which require tests on completion, with the tests generally being as set out in 3.9 Tests.

The Building Control Regulations require that a building/works be placed on a statutory register with accompanying documentation before the works can be opened, used, or occupied.

Irish contracts do not typically include a concept around the delivery of works.

There is no legally prescribed minimum or maximum length of time for which a defects liability period (DLP) should last. Most standard-form contracts also leave the DLP length to be decided by the parties. It is common for a DLP to last between six and 12 months, although this period can often extend to two years. During a DLP, a contractor is contractually obliged to rectify any defects or snags notified by the employer. If the contractor fails to comply with such instructions an employer may be entitled to:

• appoint an alternative contract to rectify the defects at the contractor’s expense; and/or
• deduct any retention held from the contractor.

It should be noted that while the expiry of a DLP relieves the contractor of an obligation to rectify defects notified thereafter, it does not usually extinguish a contractor’s liability for defective works. Liability under a building contract or design appointment will typically run for six or 12 years. Further details on limitation periods are set out in 9.2 Restricting Remedies.

The most common pricing method used in Ireland on larger commercial contracts is a lump sum (fixed-price) contract wherein the contractor bears responsibility for quantities. A lump-sum contract is typically accompanied by a schedule of rates which assists with the valuation of variations. Other pricing methods used include:

• remeasurable contracts, in which a contractor will receive payment based on a measurement of the work actually completed, based on pre-agreed rates;
• guaranteed maximum-price contracts, with a fixed maximum value for the works, which will apply regardless of the costs incurred by the contractor; and
• cost-plus contracts, wherein the contractor recovers the actual costs of project plus an agreed fee or percentage for profits and overheads.

Milestone payments are often specified in a designer’s professional appointment, but are rarely used in a construction contract.

Clause 15 of the Public Works Contracts include a price-variation mechanism that allows for adjustment to the contract price based on a change in material and labour costs which is calculated by reference to index figures published by the Central Statistics Office of Ireland.

The RIAI Contracts do not contain any indexation, but clause 36 of the contracts provides for adjustment to the contract sum where the price of labour and materials increases after the execution of the contract. However, clause 36 is typically amended at the behest of the employer so that the contractor takes on most – if not all – of the risk for price fluctuations.

Late or Non-Payment

Under the CCA, contractors and designers have the right to suspend works or services in the event of late payment, and will also be entitled to refer the matter to statutory adjudication. Parties may also have a contractual right to suspend works or services for late or non-payment, together with an entitlement to charge interest until the payment is made. Contracts may also provide for termination rights if money remains unpaid following the suspension.

Advance Payments

Advance payments are often made where long lead items are required on a project, and to assist with the contractor’s cash-flow. These payments will often only be made if the contractor provides an advance payment bond and/or vesting certificates to the employer which confirms that ownership of the goods is conferred upon the employer.

Delayed Payments

Other than retention, delayed payments are not a typical feature of Irish construction contracts.

Interim Payments

Most building contracts provide for interim payments, generally on a monthly basis.

Typically, a contractor is required to provide a progress statement at set intervals, detailing the work carried out to date. Following the receipt of this statement, the employer will typically issue an interim certificate which outlines the amount due to the contractor and, if the amount is lower than that claimed by the contractor, it will usually be accompanied by an explanation for the difference. The amount certified for payment will be paid within an agreed period thereafter. All invoicing and payments provisions in construction contracts will be subject to the requirements of the CCA.

Building contracts usually require a contractor to provide a detailed programme of works, which is then agreed with the employer. This programme shows the planned order and timeline for performing the works. The programme typically divides the works into distinct elements and outlines the timing and key dates for each.

The programme often does not form part of the binding contract documents because it is a flexible management tool that must be regularly updated to reflect changes in site conditions, design, or sequencing, whereas contracts focus on binding outcomes such as completion dates and deliverables. Making the programme a contract document would require formal amendments for every change, would increase the contractor’s risk, and could lead to disputes if discrepancies arise.

Where the contractor is delayed due to default of the employer or other event for which an extension of time entitlement will arise, the contractor usually must notify the employer within a specified time frame of the event and provide detailed particulars in order to claim an extension of time and/or an adjustment to the contract price. In engineering projects, where the FIDIC Contracts are often used, a contractor is often required to give advanced warning of any potential delay.

Where the works are delayed due to contractor default, the employer may have an ability to instruct the contractor to accelerate the works and will usually be entitled to levy liquidated damages against the contractor if a completion date is missed.

Concurrent delay occurs when both employer and contractor events cause delay at the same time. Irish law does not have extensive case law on this but generally follows the English “Malmaison approach” – ie, if both parties contribute to the delay, in the absence of wording to the contrary, the contractor is entitled to an extension of time (even if there is also a non-relevant concurrent delay) but not to compensation for loss and expense during the period of concurrent delay. Most standard-form contracts do not explicitly deal with concurrent delay except for the Public Works Contracts, which explicitly state that contractors cannot recover costs for delay if one or more causes of the concurrent delay is/are not a compensation event(s), and the 2017 edition of the FIDIC Contracts, which acknowledges a contractor’s entitlement to time relief.

The usual remedy available to an employer in the event of delay by a contractor is the application of liquidated damages at a pre-agreed rate (usually a fixed sum per day/week of delay), often expressed as the employer’s sole and exclusive remedy for delay. The agreed rates must be a genuine pre-estimate of the employer’s loss and, if not, the relevant provision may be deemed an unenforceable penalty clause. If there is no liquidated damages clause, or it is set aside, an employer can still claim general damages for delay as damages that flow naturally from a breach of contract – provided the employer can prove the loss suffered.

In the case of delay caused by the employer, the contractor is usually entitled to an extension of time or the costs arising from the delay, subject to compliance with obligations around mitigation and notification.

Most contracts contain an exhaustive list of delay events which entitle a contractor to an extension of time, and typically include:

• variations;
• force majeure;
• delay caused by the employer; and
• adverse weather events.

Contractors are generally required to notify the employer upon the occurrence, or within a specified time period, of such delay events. A requirement to provide notifications within prescribed time periods is often a strict condition precedent to the ability to claim an extension of time.

The assessment of the extension of time will depend on the wording of the contract, although most contracts simply provide that the extension will be “fair and reasonable”.

Force majeure only applies if, and to the extent that, it is provided for in the contract. Where an event of force majeure occurs, the general approach is for an extension of time to be granted, a suspension of the requirement to perform contractual obligations, and a corresponding relief from liquidated damages. However, force majeure may also be grounds for termination of an agreement if it persists for a specified period. There is generally no adjustment to a contract price due to force majeure.

The unamended RIAI Contracts provide for force majeure relief, but do not define force majeure. However, many bespoke contracts will prescribe a thorough list of force majeure events, and these events often must be: i) unforeseeable; ii) beyond a party’s control; and iii) those with consequences that are impossible to avoid, despite exercising reasonable care. 

There is no legislation in place covering unforeseen circumstances in construction projects, and any relief arising from these would be governed by the terms of the contract. Unforeseen circumstances which affect a project are generally governed by force majeure provisions.

In many contracts, particularly where FIDIC Contracts are used, a party’s entitlement to relief for ground or site conditions might be linked to such conditions being unforeseeable as of the date of the contract.

Disruption often refers to something that impedes the usual progress of the works, leading to reduced productivity, even if it does not necessarily delay the project. Standard-form contracts tend not to expressly provide for the issue of disruption or its consequences. In the Public Works Contracts the contractor’s ability to bring a disruption claim is explicitly excluded, and only delay costs incurred from agreed lists of compensation events will be recoverable by the contractor. Time relief is generally confined to where works are delayed and does not usually extend to disruption. 

Where one party disrupts another from performing its obligations under a contract, the courts have previously implied terms into construction contracts which can ground a claim for disruption in contract law. To ground a claim for disruption, the contractor will need to be able to point to detailed records which it has maintained. A contractor needs to be able to identify the direct effect caused by the disruption.

Under Irish law, liability cannot be excluded for:

• death or personal injury; or
• loss or damage arising due to fraud or fraudulent misrepresentation.

The Sale of Goods and Supply of Services Act 1980 provides for certain conditions in business-to-consumer construction contracts – eg, that goods will be of merchantable quality and that services will be provided with due skill and care. Liability for a breach of such implied terms can only be excluded in a business-to-consumer contract if such exclusions are fair and reasonable and brought to the attention of the consumer. 

Both gross negligence and wilful misconduct are established common law principles but have been subject to limited consideration by the Irish courts. Neither term is defined in any legislation.

Under common law, wilful misconduct has the meaning of what a reasonable person would think the parties involved intended it to have within the terms of the contract.

The general common law understanding of gross negligence is that there is no clear distinction between negligence and gross negligence. This position was reaffirmed by the Irish Supreme Court case of ICDL v European Computer Driving License foundation Ltd (2012) 3 IR 327 which held that, while gross negligence was not a defined concept within Irish contract law, the court would endeavour to interpret it as a matter of contract construction. Gross negligence was interpreted to be a “degree of negligence” where the duty of care involved has not been met “by a significant margin”.

References to wilful misconduct and gross negligence typically only arise in limitation on liability clauses wherein they are typically excluded from any limitation on liability. 

Contractors and designers often seek to limit their liability to a specified monetary amount. For contractors, that amount is often, but not always, set at the value of the contract. Designers typically seek to limit liability to an amount equivalent to the level of professional indemnity insurance held. As a matter of law, liability for (i) death or personal injury; or (ii) fraud; cannot be limited. Most limitation on liability clauses will generally state that these liabilities are not limited and typically also carve out the following from the limitation on liability:

• liability for damage to third party property;
• wilful default or gross negligence;
• claims arising from a breach of warranty as regards intellectual property rights; and
• in the case of a contractor, loss or damage to the works to which the all risks insurance is intended to respond.

Some construction parties often seek to introduce a net contribution clause which limits liability for damages in proportion to their own responsibility, rather than being held jointly and severally liable with other wrongdoers for the entire loss. This is often resisted by employers and financiers.

An employer’s liability is often limited to paying the agreed contract price as may be adjusted for variations and other agreed events throughout the project.

Indemnities are generally put in place to reimburse an indemnified party should a particular type of known liability arise, and which stems from third-party claims against the indemnified party. Informed construction parties will generally resist wide indemnities for a simple breach of contract. Indemnities are generally drafted in favour of the employer, and indemnity obligations would typically include indemnities for:

•       damage to third-party property;

•       death or personal injury;

•       causing a nuisance to third parties;

•       a breach of warranties in respect of intellectual property rights; and

•       putting the employer in breach of a notified third-party agreement.

In Irish construction projects, bonds and guarantees are key instruments used to manage financial risk and ensure performance.

A performance bond is typically provided by a contractor’s surety (usually a bank or insurer) to guarantee completion of the works, or payment of damages for contractor default. These bonds are generally for between 5% and 15% of the contract price and are often on-demand or conditional – with the latter requiring proof of default on the part of the contractor. Conditional bonds are more common in the Irish market as they are cheaper for contractors to procure.

An advance payment bond secures the repayment of upfront funds provided by the employer, such as prepayments for materials, if the contractor fails to deliver the materials.

A parent-company guarantee is often used where the contractor is a subsidiary. It provides reassurance that the parent company will fulfil the contractual obligations if the subsidiary fails. This is particularly important where the subsidiary has limited financial standing.

Retention bonds may be used as alternatives to withholding retention money. These allow the employer to receive full payment if the contractor fails to comply with its defects liability period obligations.

The types of insurance usually procured for construction projects are:

• professional indemnity insurance covering defective design and other professional negligence;
• public liability insurance covering loss or damage to third parties due to negligence;
• employers’ liability insurance covering injury to employees; and
• all-risks insurance, procured by the contractor or employer, covering loss or damage to the works (for the full reinstatement value plus a contribution towards demolition costs and professional fees) during the course of the works and, often, the defects liability period as well.

Other less common insurances taken out include non-negligence insurance, an owner-controlled insurance programme and latent defects insurance.

The insolvency of a party to a construction contract will usually entitle the counterparty to terminate the contract. An employer will generally be entitled to call on any performance bond following the termination of the employment of a contractor for insolvency.

Irish contracts generally seek to allocate risk to a specific party, but the sharing of responsibility for certain risks is becoming more common – particularly with the increased use of NEC Contracts and their focus on co-operation and collaboration.

Examples of where risks are shared include:

• ground conditions – a contractor may bear the risk for foreseeable ground conditions with the employer being responsible for unforeseeable conditions;
• price-variation clauses used in the Public Works Contracts, which allow for shared risk of material price increases or inflation; and
• design-and-build arrangements in which an employer may appoint certain designers and retain the risk for their design with the balance of the design risk being placed on the contractor.

Personnel who are critical to the performance of the project are often agreed by the parties, identified in the contract and referred to as “key personnel”.

The terms of the contract will usually require the contractor to ensure the named person(s) remains on the project and not be removed without the consent of the employer. Employers often have the right to instruct the removal of individuals for misconduct or incompetence.

Employers will often agree a list of specific subcontractors to be appointed by a contractor with a right of approval for any further subcontractors to be added. The contractor will always remain responsible for the works and/or design carried out by its subcontractors, and will be liable to the employer for any loss or damage arising from subcontract works.

Subcontracts are generally not as detailed as main contracts except for significant subcontract packages on larger, more sophisticated projects. However, most experienced contractors will seek to pass down risk from their main contract with the employer to their subcontracts.

Designers and contractors with design responsibility will generally warrant that they own the intellectual property in the design but will grant the employer an irrevocable licence to use the intellectual property for all purposes connected to the works. The warranty is usually accompanied with an indemnity in favour of the employer for any alleged breach or infringement of third-party intellectual property rights. The designer will generally not be liable for use of the intellectual property for any purpose other than that for which it was prepared or provided.

Typical employer remedies are as follows:

• damages for breach of contract;
• termination rights usually accompanied by a right to call on a performance bond or parent-company guarantee;
• an indemnity for damages/injury to third party property or persons;
• liquidated damages for delay; and
• the right to insist on the rectification of defects during the contract and a defect-liability period (which may be accompanied by right to keep retention). 

Typical contractor remedies include:

• extension of time for delays caused by the employer or events outside the control of the contractor;
• suspension of the works for non-payment of fees under the CCA, which may be accompanied by a contractual right to termination; and
• the right to payment and, following a variation or other agreed events, an increase in the contract price.

Typical designer remedies are as follows:

• the right to payment and additional payment if required to perform additional services;
• termination rights for employer insolvency; and
• suspension rights for non-payment of fees under the CCA.

Other than as set out at 6.1 Exclusion of Liability, 6.3 Limitation of Liability, 9.3 Sole Remedy Clauses and 9.4 Excluded Damages, construction contracts do not typically restrict the remedies available to a party. However, contracts will often contain express wording restricting the ability of a party to bring proceedings against its counterparty for breach of contract after an agreed number of years. Limitation periods are usually either six or twelve years, but are generally being dictated by the nature and cost of the project. In the absence of express wording, the liability period for a breach of contract, pursuant to the Statute of Limitations Act 1957, is twelve years (from the date of the breach) if the contract is executed under seal or as a deed, or six years (from the date of the breach) if the contract is executed under hand.

Sole remedy clauses are not common, with contracts often expressing that parties’ common law rights, rights under statute and/or equitable remedies are reserved. It is not unusual, however, for liquidated damages to be an employer’s sole remedy for delay.

Under common law, a party can recover damages for breach of contract only to the extent that those losses arise naturally from the breach, or, if the specific damages or losses were within the reasonable contemplation of both parties at the time that they contracted. Parties to construction contracts will sometimes also expressly exclude liability for indirect and consequential loss.

Retention Clauses

Retention is a common feature of Irish construction contracts as it offers security to employers that a contractor will comply with its defects liability period obligations. Generally, half of the retained amount is released at practical completion, with the balance released following the defects liability period. Occasionally, a retention bond is provided in lieu of retention.

Suspension Clauses

There is a statutory right for a contractor to suspend works under the CCA for non-payment. This right can be set out in the contract, which often provides the employer with suspension rights as well.

Determination by Employer

A contract will typically list several instances in which an employer can terminate the engagement of a contractor, but will generally always allow for termination for an un-cured breach of contract or where the contractor becomes insolvent. Following termination due to contractor default, the contractor is typically required to vacate the site with the employer being entitled to appoint a replacement contractor to complete the works at the contractor’s expense. The employer will usually be able to call on any performance bond following termination for fault.

If an employer is entitled to terminate for convenience, the employer may not be able to call on a performance bond and the contractor may recover payment for completed work along with demobilisation costs and an element of profit.

Determination by the Contractor

A contractor is usually permitted to terminate its engagement under the contract due to the insolvency of the employer or persistent non-payment. A contractor’s termination rights may be subject to the rights of a financier or other third party under a collateral agreement to step in to the building contract after the contractor gives notification of its intention to terminate the employer.

The Irish courts are the primary institutions for the purpose of dispute resolution in Ireland. In descending order, the five tiers are:

• the Supreme Court;
• the Court of Appeal;
• the High Court;
• the Circuit Court; and
• the District Court.

In limited circumstances, the Irish courts may refer a dispute to the Courts of Justice of the European Union if the dispute involves interpretation of European Union law.

The following alternative-dispute resolution procedures are often utilised in construction disputes in Ireland:

• Conciliation – a voluntary confidential dispute-resolution process where an independent third party assists disputing parties in reaching a negotiated settlement. If a negotiated settlement is not reached, the conciliator will issue a determination which can be rejected by either party. If a party does not reject the determination within a prescribed time period, the decision will become binding.
• Mediation – a confidential, consensual process where an independent mediator facilitates a negotiation between the parties in an attempt to reach a mutually acceptable outcome governed by the Mediation Act 2017.
• Adjudication – a streamlined, statutorily mandated dispute resolution mechanism under the CCA that provides an independent, binding determination on payment disputes within a short time frame, typically within 28 days, to maintain cash flow and limit project delays.
• Arbitration – a private binding dispute-resolution process where an independent arbitrator determines the dispute with procedures governed by the Arbitration Act 2010.

Other

• Expert determination – a consensual process whereby an agreed independent expert resolves technical disputes quickly issuing a binding decision on defined matters under the contract without court or arbitration procedures.
• Project boards – bodies established under a specific contract where disputes may be brought in the first instance.

The contract may specify an order of process for dispute resolution – eg, that a dispute should first go to a project board, and then to conciliation, before escalating to the courts. However, a contractor will always have recourse to adjudication under the CCA for payment disputes, irrespective of the contractual provisions.