In what circumstances will a construction contractor be required to make progress payments to a contractor during the construction of a project?

[143] In today’s construction industry, whether in large industrial, commercial, institutional or residential projects, or even in small residential construction or renovation jobs, progress payments, also called interim payments, are almost always provided for in the construction contracts. Common sense shows the need for such progress payments. The practical need for interim payments was also judicially recognized many years ago in Cragnoline v. Southwick (1916), 27 O.W.R. 445, where the court said: “It might easily be … that a contractor relied upon such payment wherewith to purchase materials and pay wages as he went along and could not proceed without it. A contractor … cannot wait until all [contracts] are completed for payment, but must have interim payments to carry him along”. These payments are payments made to a contractor during the progress of the work on an agreed basis before the contractor has all actually earned the right to payment by completion of all the work contracted for so it has money to pay for material, labour and subcontractors. Contractors can rarely if ever finance the construction out of their own capital or be expected to do so.