Construction Law Blog

In an article published on Tuesday, February 25, 2020, for Contractor Magazine, Kelly Bundy and Liz Burneson discuss the enforceability of pay-if-paid provisions, alternatives to those provisions, and tips for subcontractors faced with these provisions during the contract negotiation stage and throughout the course of a project.

According to Kelly and Liz, the enforceability of pay-if-paid provisions varies by state. Subcontractors should pay attention to what law applies for each project and whether pay-if-paid provisions are enforceable in that jurisdiction. Kelly and Liz recommend that subcontractors analyze their negotiating position at the contracting stage and propose alternatives to pay-if-paid provisions if possible. 

During the course of a project, subcontractors should ensure that they follow contract provisions for submitting payment applications and claims. If a dispute arises, subcontractors should determine whether any defenses to pay-if-paid provisions might apply.

Ultimately, subcontractors who fail to pay attention to pay-if-paid provisions in their subcontracts may find themselves in a difficult position unable to obtain payment from the contractor.

To learn more about pay-if-paid provisions and alternatives to these provisions, read the article on page 34 in Contractor Magazine here and contact the Hirschler team with any questions.