Contingent Payment

noun

A payment made only if some specified condition is met, such as whether the equipment bought or leased works according to the requirements.

A contingent payment clause in a construction contract means that some event (e.g. a payment from a higher tier) is a necessary prerequisite to the payment obligations to a subcontractor. These are commonly called “pay-if-paid” or “pay-when-paid” clauses. Pay-if-paid clauses are often unenforceable in many states.

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Construction attorneys: Courtney Stricklen, Christopher Ng, Andrea Goldman, and Peter Ryan