Construction contracts are oftentimes lengthy and complicated. The contracts underlying a construction project form the basis of the relationships between the signing parties, and provide an outline to how the project will go. A…Read More
Pay If Paid ArticlesRSS feed for this section
Every day, credit professionals are challenged to handle sensitive financial situations for businesses. They are trusted to analyze complex situations and to make an educated judgment about how to financially interact with other companies. This is a big job. It can…Read More
Have you ever come across the words “Pay-When-Paid” or “Pay-If-Paid” in your construction contracts?
These provisions are ultimately about determining who will bear the financial risk of a construction project. In other words,…Read More
The Ohio Supreme Court chimed in on “pay if paid” clauses last week, and it’s not good for subcontractors.
In Transtar Elec., Inc. v. A.E.M. Elec. Servs. Corp., the court decided that a pay if paid clause…Read More
We have seen in recent posts that pay if paid clauses are generally disfavored and subject to strict review by courts. While pay if paid clauses are still enforceable in many states, provided…Read More
Pay when paid, and pay if paid clauses are pretty common, but can be misunderstood – both in operation and purpose. Below, I’ll attempt to provide some answers and clarifications to common questions and misconceptions…Read More
Pay if paid clauses are an attempt to shift the risk of non-payment on construction projects to subcontractors, suppliers, and other parties on the lower end of the payment chain. These clauses are looked upon with disfavor by courts in most states, and require certain specific language in order to…Read More
ENR.com and the Construction Financial Management Association (CFMA) recently published some articles suggesting that “cash-strapped public and private owners are shifting greater risk onto contractors through onerous deal terms” [Owners Shift More Financial Risk as Recovery…Read More
Most states prohibit parties from contracting out of their mechanics lien rights. A supplier or a subcontractor, in other words, cannot agree before starting a project that they will waive their lien rights. These provisions – referred to as…Read More
In 1791, Thomas Jefferson introduced the first mechanics lien law legislation and invented a public policy interest in the United States to always protect contractors, suppliers, and subcontractors from the risk of non-payment….Read More