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"Pay-when-paid" Clause Did Not Shift Payment Risk Payment; Subcontractors

Friday, September 03, 2004 02:44 pm

"Pay-when-paid" Clause Did Not Shift Payment Risk Payment; Subcontractors

An Ohio court has ruled that a "pay-when-paid" clause in a subcontract did not shift the risk of owner nonpayment to the subcontractor.

Fortney & Weygandt, Inc. (F&W) was the prime contractor for construction of a commercial center. F&W subcontracted the excavation and grading work to Chapman Excavating Co., Inc. The subcontract said, "Partial payments of the subcontract sum shall be made within ten (10) days after payment is received by F&W from Owner."

Chapman performed the work and received two progress payments. F&W then declined to make further payments because the proje [...]

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