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Default Was Exception To "Pay-if-paid" Clause Payment-final; Subcontractors

Saturday, April 09, 2005 02:40 pm

Default Was Exception To "Pay-if-paid"Clause Payment-final; Subcontractors

A Texas court has ruled that when prime contractor default was an express exception to a "pay-if-paid"clause in a subcontract, the project owner's declaration of default was sufficient to trigger the prime's payment obligation. The sub was not required to prove default.

The Port Neches-Groves Independent School District awarded a contract to Pyramid Constructors, L.L.P. for expansion and renovation of a high school building. Pyramid subcontracted the heating, ventilation and air conditioning work to Sunbelt Controls, Inc. The subcontract contained the following provision. [...]

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