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Re: Pay when Paid

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In a message dated 97-09-16 01:10:28 EDT, BAllenSE(--nospam--at) (Bill Allen,
S.E. @ ALLEN DESIGNS) writes:

<< I was talking to a colleague today about a "pay when paid" clause in
 contracts. He told me that this was an illegal clause and is therefore not
 enforceable (sp?). Does anyone have any legal experience with this?

In California,  it is my understanding the elimination of the pay when paid
clause for the recent subcontractor case means we're back to contract terms
of payment w/o conditions.  i.e.,  if the owner does not pay the architect,
 the architect still has a contractural obligation to the sub-designer;  

similarly,  if the contractor does not collect from the owner,  it does not
release the contractor from his subcontract obligations.  

Previously,  the general could shrug and say the owner did not pay and the
sub would be left holding the bag.  Now,  the sub can still collect from the
general.  i.e.,  the general contractor or designer will now be the cashflow
bank and the subs will not be at the bottom of the food chain.

Ronnie Fong
Fremont, CA