Quick Note: Be Careful with Pay if Paid Clauses (Both Subcontractors and General Contractors)

Construction worker in funny pose

Aside from waiver of lien rights, the most troublesome contractual impediment to payment for a subcontractor or supplier on a project often is the “pay if paid” clause.

October 12, 2020
Christopher G. Hill - Construction Law Musings

Aside from waiver of lien rights (something that will be illegal in Virginia after July 1, 2015), the most troublesome contractual impediment to payment for a subcontractor or supplier on a project often is the “pay if paid” clause. As a general rule, in Virginia, these clauses where drafted in the proper fashion, are enforceable. As I have said many times, in Virginia freedom of contract almost always wins out.

While this is the case, I emphasize that such clauses must be very explicit and specific. Furthermore, and in something that should be obvious, these clauses are generally limited by the Courts of Virginia to only be enforceable and to only forgive the need for payment if the upstream contractor on the construction job has not been paid for the work that the sub claiming non payment has done.

Mr. Hill may be contacted at chrisghill@constructionlawva.com



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