Anthony LaPlaca | Seyfarth Shaw For general contractors working in Virginia, 2023 marks the end of one of the more prolific contractual rights available—the pay-if-paid defense. Until now, pay-if-paid clauses were a valid means of shifting to subcontractors the risk of owner insolvency or wrongful withholding. In the spirit of freedom of contract, Virginia courts… Continue reading New Statutory Payment Regime for Public and Private Works in Virginia
Tag: Pay-if-Paid Clause
“Pay-if-Paid” vs. “Pay-when-Paid”: Understanding Contractor’s and Subcontractor’s Assumption of Risk of Owner’s Nonpayment
Andrew Hanna | Frantz Ward In a typical construction contract, the project owner pays the prime contractor, and the prime contractor in turn pays the subcontractor, and so on down the line. The question then arises, what happens if the owner doesn’t pay the prime contractor? Does the prime contractor have to pay the subcontractor?… Continue reading “Pay-if-Paid” vs. “Pay-when-Paid”: Understanding Contractor’s and Subcontractor’s Assumption of Risk of Owner’s Nonpayment
Pay-If-Paid No Longer Enforceable in Virginia
Josephine Bahn, Jeffery Mullen and Lawrence Prosen | Cozen O’Connor On January 1, 2023, “pay-if-paid” clauses in new contracts became void as against public policy and unenforceable as a result of Virginia Senate Bill 550 (SB 550) going into effect. See Va. Code §§ 2.2-4354 and 11-4.6. Moreover, pay-when-paid clauses in some public and private construction contracts were also… Continue reading Pay-If-Paid No Longer Enforceable in Virginia
Florida Permits Pay-if-Paid Provisions, if you Say the Magic Words
Aaron S. Brotman | Cole Schotz A “Pay-if-Paid” provision, to a much greater degree than the related “Pay-when-Paid” provision, is an often-controversial contingent payment clause that makes payment to a downstream contractor or supplier expressly contingent on receipt of payment by the higher tier entity. For example, a subcontractor subject to a pay-if-paid clause is… Continue reading Florida Permits Pay-if-Paid Provisions, if you Say the Magic Words
New Virginia Law Bans Contingent Payment Provisions in Construction Contracts
Nicholas Morello and Jackson Nichols | Cohen Seglias Pallas Greenhall & Furman A new bill has been signed into law in Virginia that prohibits the use of contingent payment provisions on construction projects. The new law amends VA ST §§ 2.2-4354 and 11-4.6 and provides that “[p]ayment by the party contracting with the contractor shall… Continue reading New Virginia Law Bans Contingent Payment Provisions in Construction Contracts