I have a contract with a pay when paid clause in the USVI, but do not want to miss my claim deadline. Would the pay when paid clause invalidate a bond/lien claim? Do I have to wait for my customer to get paid before I can get paid?
Jun 19, 2019
Good question. It appears that, in the Virgin Islands, pay when paid clauses are generally unenforceable because they infringe upon the rights otherwise granted to construction businesses by the Virgin Islands Code. This is particularly true when the payment rights affected by the pay when paid clause infringe upon a claimant's mechanics lien rights in the USVI, as decided in Shearman & Assocs. v. Continental Casualty Company. So, if a mechanics lien or bond claim becomes necessary in order to recover payment in the Virgin Islands, the existence of a pay when paid clause in the construction contract will not prohibit the making of a valid claim for payment.