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Do I have a straight-forward claim on the contractor for payment of my invoices (going back more than 3 months)?

CaliforniaPayment DisputesRecovery Options

I am a California-based subcontractor of Parsons Corp working for PG&E (who just declared bankruptcy). My contract specifies "paid when paid", however I understand that is is not legally enforceable in CA. Do I have a clear-cut claim with Parsons, even if PG&E does not pay them?

1 reply

Feb 20, 2019
Pay-if-paid, pay-when-paid, and other contractual risk-shifting clauses can definitely cause worry and frustration. In California, pay-when-paid clauses may be enforceable to a minimal extent, but only to fix a reasonable time for payment. However, to be valid, a pay-when-paid clause must specifically provide that the subcontractor will be paid within a reasonable amount of time after s/he completes his/her work regardless of whether the general contractor has yet been paid. California courts have held that pay-when-paid clauses that defer payment until after the GC has been paid are invalid.

Accordingly, a subcontractor in California may make a claim against the GC for payment despite any purported pay-when-paid clause within the contractual agreement between them.

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