When I’m paid, I’ll pay you. Timing devices can be unclear and let subcontractors recover the amount owed even if the contractor hasn’t been paid.
One of the significant risks in a construction project is payment and a pay to be paid provision can allocate that risk to the subcontractors. This provision is also known as a pay when paid or pay if paid provision. If properly written, this type of provision states that a condition precedent to the obligation of the contractor to pay the subcontractor, the contractor must first be paid by the owner for the work performed by the subcontractor. If the contractor is not paid for the subcontractor’s work, then the contractor has no obligation to pay the subcontractor. This type of provision allocates to the subcontractor the risk of non‐payment by the owner, and, therefore, the subcontractor is essentially extending credit to a party with whom the subcontractor does not even have a contractual relationship.
John A. Snow
Parsons Behle & Latimer
- Attorney with Parsons Behle & Latimer, Salt Lake City, Utah
- Practice consists of general civil litigation, including commercial, professional malpractice, construction, and insurance coverage and defense
- Designated in The Best Lawyers in America as Lawyer of the Year in litigation, real estate, and construction law; and designated in the areas of practice of legal malpractice defense, commercial litigation, and construction
- Designated in Utah Business magazine’s Utah Legal Elite in the areas of business and civil litigation and construction law and as a Super Lawyer in the Mountain States in Super Lawyer Magazine
- Chair of the Ethics Advisory Opinion Committee of the Utah State Bar
- Can be contacted at [email protected] or 801-536-6772
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