The Effect of "Pay When Paid" Clauses08-May-12
By Ryan Sharp
A subcontractor must be mindful of “pay when paid” clauses, or possibly assume the risk that it won’t get paid at all.
It is not uncommon to see subcontracts which include a clause indicating that the subcontractor will not be paid for its work until the contractor has been paid by the project owner. Clearly this can create additional risk for the subcontractor and consideration should be given to such a clause prior to committing to work for the contractor.
These “pay when paid” clauses have been considered several times by courts across the country. The courts have unfortunately failed to reach a consensus regarding the interpretation of such a clause. There have been differing interpretations on this issue.
Click here to read the full article, which was published in the March/April edition of Construction BusinessThe Effect of "Pay When Paid" Clauses