Friday, July 27, 2007

Pay if Paid Clauses: The Leg Speaks

An interesting bill was passed by the 80th Legislature dealing with pay-if-paid clauses...all collections lawyers and contractors should take a look at it. Basically, it deals with the situation in many contracts where general contractors state "we won't pay you, Mr. Subcontractor, unless we get paid." What I've seen happen frequently (and apparently this is a universal experience for subcontractors) is the reason the general contractor is not getting paid is because the general contractor screwed something up, which had nothing to do with that subcontractor's work. In these situations, there are, effective 9/1/2007, limitations set to this contractual provision set out by statute. There are some procedural requirements, so it is not a gimmie, but it is worth taking a look for it might provide some strength to a subcontractor that has not been paid in this situation.

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