IRELAND Law and Practice Contributed by: Diarmuid Mawe, Craig Kenny, Katelin Toomey and William Fogarty, Maples Group
7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is normal for a client to seek the provision of a performance bond from the contractor as a form of security for the proper performance of the works, and this would typically be in addition to the retention by the client of a set percentage (normally 5%) of the payments to the contractor during the construction of the works. Depend - ing on the financial robustness of the contrac - tor, a parent company guarantee may also be required. 7.6 Liens or Encumbrances in the Event of Non-Payment The creation of liens and encumbrances is not common. It is noteworthy, however, that under the Construction Contracts Act 2013, contrac - tors and subcontractors have a statutory right to suspend their works or refer a payment dispute to statutory adjudication in the event of non- payment of a due amount. 7.7 Requirements Before Use or Inhabitation Under the Building Regulations, a building can - not be occupied or used until prescribed compli - ance documentation has been submitted to the relevant building control authority and entered onto the relevant statutory register. 8. Tax 8.1 VAT and Sales Tax Sales of commercial property can be divided into two categories: • sales of new property; and • sales of old property.
• awarding a design-and-build (D&B) contract to a main contractor that takes full respon - sibility for both design and construction, including the work of its external professional team and subcontractors; or • appointing its own design team and enter - ing into a build-only construction contract if it wishes to maintain more control over the design of the development. Funders may prefer the D&B model, as it offers a sole point of responsibility for design and con - struction. 7.3 Management of Construction Risk A contractor usually provides insurance-backed indemnities to the client as part of the construc - tion contract. It has become more common for contractors to seek to limit their liability with a cap on their general liability under the contract and excluding certain damages, such as indirect and consequential damages and losses. Such exclusions have not become the market norm, but contractors are increasingly pushing for such concessions due to the strong market demand for experienced and capable contractors. 7.4 Management of Schedule-Related Risk Most forms of construction contracts in Ireland make provisions for the application of liquidated damages if the contractor does not reach com - pletion by the agreed date. The liquidated dam - ages must be based on a genuine estimate of the losses to be incurred by the client if the works do not complete on time, and can be capped at a percentage of the contract value. In the event of delay due to the default of the contractor, the cli - ent is entitled to set off the liquidated damages against payments due to the contractor.
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