There are different perspectives on the risk of nonpayment.
A “pay if paid” condition is a condition precedent that requires payment from the owner before the contractor has a duty to pay a subcontractor or supplier. A “pay when paid” clause is a payment condition that establishes a reasonable time for the contractor to comply with its duty to make payment to a subcontractor or supplier upon the contractor’s receipt of payment from the owner. Subcontractors may also use both pay if paid and pay when paid clauses to condition their obligation to pay lower?tier subcontractors and suppliers. This video reviews the differences between these two types of condition precedents.
Scott D. Cahalan
Smith, Gambrell & Russell, LLP
- Partner in the construction law section of Smith, Gambrell and Russell, LLP, an AmLaw 200 firm
- Part-time instructor of graduate courses in design and construction law and real estate development law at the Georgia Institute of Technology
- General counsel to the Georgia Utility Contractor’s Association
- Practice includes all aspects of design and construction law from drafting and negotiating prime contractors, subcontracts, and purchase orders to mediating, arbitrating, and litigating construction disputes
- Drafted form construction contracts for the Associated Owners and Developers, a national organization
- Recognized by Chambers USA, The Best Lawyers in America, and Georgia Super Lawyers
- Frequent author and lecturer on construction law
- Member of the State Bar of Georgia, Northern District of Georgia, and 11th Circuit Court of Appeals
- J.D. degree, with honors, University of Georgia; B.S. degree in construction engineering, Iowa State University
- Can be contacted at [email protected], [email protected], or 404-815-3711
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