Meghan Hunter Harrison | Troutman Pepper Virginia has joined the ranks of states that ban “pay-if-paid” clauses. Contingent payment clauses, like “pay-if-paid” and “pay-when-paid” clauses, protect contractors: A contractor need not pay its subcontractors or suppliers until the owner pays the contractor. A “pay-if-paid” clause conditions a subcontractor’s right to payment on the owner paying the contractor.… Continue reading Virginia Bans Pay-If-Paid Clauses to Protect Construction Subcontractors
Tag: Pay-When-Paid Clause
New Statutory Payment Regime for Public and Private Works in Virginia
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
“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
Even Federal Contractors and Subcontractors Should Pay Heed to State Law on Conditional Payment Clauses
Dismas Locaria and Caleb McCallum | Venable The Virginia legislature recently took a broad step toward limiting the use of certain common clauses in construction subcontracts. This new legislation, effective January 1, 2023, amends the state’s Prompt Payment Act (Va. Code § 2.2-4354) and wage theft statute (Va. Code § 11-4.6) to effectively prohibit the… Continue reading Even Federal Contractors and Subcontractors Should Pay Heed to State Law on Conditional Payment Clauses
Virginia Prohibits Pay-If-Paid Clauses and Limits Pay-When-Paid Language
Daniel Miktus and Jeffrey G. Gilmore | Akerman On April 27, 2022, Virginia Governor Glenn Youngkin ratified amendments to two Virginia statutes, prohibiting pay-if-paid clauses in construction contracts, and limiting the effectiveness of pay-when-paid clauses in certain agreements. Pay-if-paid clauses generally provide that payment from a construction project owner to the general contractor is a… Continue reading Virginia Prohibits Pay-If-Paid Clauses and Limits Pay-When-Paid Language