Construction Litigation
Construction Remedies and Security
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?
