Pay-if-Paid Terms in Subcontracts: Love, Hate & the Transtar Decision | Brouse McDowell | Ohio Law Firm

Pay-if-Paid Terms in Subcontracts: Love, Hate & the Transtar Decision

By James T. Dixon on March 18, 2015

As written in the March 2015 Properties Northeast Ohio's Monthly Magazine
By, James T. Dixon, Partner, Brouse McDowell, LPA

The Ohio Supreme Court recently issued its much-anticipated ruling in Transtar Elec., Inc. v. A.E.M. Elec., Servs. Corp., 2014-Ohio-3095. The often-discussed case is popular due to the impact of decision. Pay-if-paid provisions affect the bottom line directly and inversely, for contractors and subcontractors. Thus, contractors love them and subcontractors hate them. Because the Transtar decision made enforcement of pay-if-paid provisions much easier, that decision will be viewed the same way.

By agreeing to a pay-if-paid provision, the subcontractor agrees that it will only be paid for its work if the owner pays the contractor for that work. Thus, a pay-if-paid provision can be one of the most effective riskshifting provisions in a subcontract. Such language is often included in progress payment, final payment and claim liquidation provisions.

Click here to read the rest of the article.

Share Article Via

We use cookies on our website. To learn more about how we use cookies and how to change your cookies settings if you do not want cookies on your computer, please see our updated Privacy Statement. By continuing to use this site you consent to our use of cookies in accordance with our Privacy Statement.