As a subcontractor to a prime contractor we are subject to the excuse we get paid when they get paid practice. Can we write our contracts to state terms that are more in line with net 30 less retention or are we at the prime's mercy?
1 reply
Jun 17, 2020
Subcontractors don't automatically have to wait for their customers to be paid before they get paid. It's common for construction contracts to feature "pay when paid" or "pay if paid" terms - and if that's the case, then the customer won't have to make payment until they get paid.
However, if the contract doesn't include those terms, then the customer receiving payment is more or less irrelevant, at least for the purposes of deciding when payment is due. Further discussion here: What Does “Pay-When-Paid” Mean?
Obviously, there are relationships and recovery strategies worth taking into account. However, regardless of whether the contract is Net 30, Net 15, or whatever else - if the contract doesn't include a pay if paid or pay when paid provision, then payment is due according to the subcontract. That's true even if the customer hasn't gotten paid, themselves.
If you'd like some help reviewing your contract terms or drafting new ones, one of these construction attorneys may be able to help: Find an Ohio Construction Lawyer. You can contact them directly from their profiles, there.