Watch out for “Pay-When-Paid” Provisions in that Construction Contract
A pay-when-paid provision in a construction contract generally means that a contractor is not liable for payment to its subcontractors until such time as it is first paid by the owner. In the context of litigation, a defense based on a contractual pay-when-paid provision might assert that a plaintiff subcontractor is not entitled to receive payment unless the owner first pays the contractor for subcontractor’s fees, or, alternately, that under the relevant contractor-subcontractor agreement a plaintiff subcontractor is not entitled to receive further payment pursuant to its claims until the contractor is paid by the owner for the fees claimed.
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Alexander Barthet is a board certified construction attorney in Florida and holds a B.S. in mechanical engineering. He manages The Barthet Firm, a ten lawyer construction law firm in Miami, and maintains a construction law blog at www.TheLienZone.com. He can be reached at 305-347-5295 or alex@barthet.com
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