Credit: wutzkohphoto/Shutterstock.com Clear and Unequivocal Pay-If-Paid Provision in Construction Contract Establishes Precondition to Payment Between Contractor and Subcontractor
A pay-if-paid clause in a construction contract provides that a subcontractor will be paid by the general contractor only if the owner pays the general contractor for the subcontractor's work.
April 24, 2023 at 10:00 AM
7 minute read
The New Jersey Appellate Division recently upheld the enforceability of "pay-if-paid" provisions in construction contracts, "as long as the contract on its face contains clear and unequivocal language that unambiguously sets forth the parties' intention and agreement that owner payment is a condition precedent to the general contractor's obligation to pay the subcontractor," in JPC Merger Sub v. Tricon Enterprises, 474 N.J. Super. 145, 163 (App. Div. 2022). In JPC Merger, the three-judge appellate panel agreed that "such a provision is neither unfair, unconscionable, nor against public policy."
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