The clause shifts the risk of owner nonpayment to the subcontractor, who is not entitled to payment unless the contractor is paid. It differs from pay-when-paid, which affects timing rather than entitlement.
Several states void the clause as against public policy.
Alternative Names:
Pay If Paid, Conditional Payment Clause
Why it Matters?
Enforceability varies sharply, with several states voiding these clauses entirely and others requiring unmistakably clear language creating a condition precedent rather than a timing provision. Ambiguous clauses are construed as pay-when-paid, which merely delays payment for a reasonable time. Subcontractors in states voiding the clause retain lien and bond rights regardless of the contract language.
Frequently Confused with
Related terms
Frequently asked questions
How does pay-if-paid differ from pay-when-paid?
Are the clauses enforceable?
