Getting Paid In Hard Times - I. Formation Of The Contract

Riley, Dennis J.
Organization: Deep Foundations Institute
Pages: 11
Publication Date: Jan 1, 1991
A. This outline addresses what a sub-contractor, or a subsub-contractor should do to get paid in the event the general contractor or building owner files for bankruptcy. B. Negotiating payment terms. Progress payments vs. "pay when paid". How a sub or subsub can avoid financing the contract. C. Court interpretation of "pay when paid" clauses allow postponement not excusal of payment. See, e.g., Seal Tite Corporation v. Ehret. Inc., 589 F. Supp. 701 (D.N.J. 1984) (where the court held that the general contractor could not delay payment indefinitely to the subcontractor in the event of non-payment from the owner); United Plate Glass Co. v. Metal Industries. Inc., 525 A.2d 468 (Commw. Ct. Pa. 1987) (where the court held that payment from owner was not a condition precedent to paying subcontractor but instead a timing mechanism indicating when payment should be made); But see. Straham v. Landis Construction Co., 499 So. 2d 417 (La. App. 4 Cir. 1986) (where the court strictly interpreted the "pay when paid" clause).
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