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Contributor: Walker M. Duke Duke Law Office, P.C.

SUMMARY: “Pay When Paid” contract clauses have become a fairly common tool used by general contractors to limit financial liability to subcontractors in the event of an owner’s insolvency. In a nutshell, they provide that a GC’s obligation to pay the downstream party is contingent on the GC being paid by the owner. These clauses tend to be heavy handed, so the question is this: Are Pay When Paid clauses actually enforceable?

As a general rule, Pay When Paid clauses are typically enforceable IF they create a condition precedent and not simply a covenant to pay.

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Walker M. Duke Duke Law Office, P.C. Walker M. Duke is a seasoned attorney who has represented businesses and individuals... [Profile | Documents]

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