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OnDemand Course

Pay When Paid and Pay if Paid Clauses: Who Bears the Risk of Non-Payment?

Explore the controversies, issues, and legal rights and remedies surrounding pay when paid and pay if paid clauses.

The enforceability of a pay if paid clause in a subcontract can be the difference between whether a contractor or its subcontractor remains in business in the event of an owner's failure to pay for a construction project. Pay if paid clauses are two of the most misunderstood, controversial, and contentious terms commonly included and negotiated in subcontracts. Contractors, subcontractors, and even some legislatures and courts have split as to whether pay if paid clauses are a fair allocation of the risk of an owner's nonpayment. This topic will explore the controversies and issues surrounding conditional payment provisions. This information will help persons responsible for drafting and negotiating construction subcontracts, including contract administrators, project executives, project managers, superintendents, and attorneys to recognize pay when paid and pay if paid clauses, to understand the requirements for enforcing such clauses, and to negotiate for the inclusion, exclusion, or modification of such clauses to better address the risk of an owner's nonpayment. It will help persons who administer and enforce construction subcontracts to better understand their rights and options in the event of a dispute involving a conditional payment provision and is critical to those who need to know and understand their rights and obligations under construction subcontracts.

Learning Objectives

  • You will be able to recognize ways to defeat or avoid pay when paid and pay if paid clauses.
  • You will be able to explain the legal issues that relate to pay if paid clauses.
  • You will be able to identify the differences between pay when paid and pay if paid clauses.
  • You will be able to define conditional payment provisions.

92 minutes
Course Exam
Certificate of Completion
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Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Introduction

  • Conditional Payment Provisions (CPP)

Payment Absent a CPP

  • Common Law
  • Prompt Payment Acts

Conditional Payment Provisions

  • Payment Conditions
  • Conditions Precedent
  • Timing Condition

Enforceability

  • Freedom of Contract
  • Public Policy
    • Pay If Paid
    • Pay When Paid
  • Avoidance Clauses in General

Different Perspectives on the Risk of NonPayment

  • Contractor Perspective
  • Subcontractor Perspective
  • Owner Perspective

Defeating or Avoiding Pay If Paid

  • Ambiguity
  • Public Policy
  • Settlement
  • Implied Duty of Good Faith and Fair Dealing
  • Payment Bonds
  • Prevention Doctrine
  • Unjust Enrichment

Drafting and Modifying CPPs

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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

Applications have not yet been submitted for Delaware, Idaho, Kentucky, Maine, New Hampshire, Ohio, Oklahoma, South Carolina, and Wyoming CLE for this course. However, if you are interested in obtaining CLE for any of the listed states or have any additional credit questions please email us at [email protected] or call us at 866-352-9540.

This course was last revised on November 6, 2019.

Call 1-866-352-9540 for further credit information.

  • CA MCLE 1.5
     
  • Lorman Business Center, LLC. is a State Bar of California approved MCLE sponsor and this course qualifies for 1.5 CLE hours of participatory credit.
     

To earn each credit Lorman offers through the OnDemand learning platform, you need to watch 100% of the program. Also, for certain credits you will need to fulfill additional requirements which will be displayed on the "credits" tab when viewing the course.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Scott D. Cahalan

Scott D. Cahalan

Smith, Gambrell & Russell, LLP

Scott Cahalan

  • Partner in the construction law and litigation 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. with honors from University of Georgia, B.S. in construction engineering from Iowa State University
  • Contact information [email protected], [email protected], and (404) 815-3711
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Product ID: 406556
Published 2019
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