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Incorporation By Reference Does Not Negate A Pay-when-paid Clause

Wednesday, May 26, 2010 04:16 am


Payment - Subcontractor Universal Concrete Products Corporation v. Turner Construction Company, 2010 U.S. App. Lexis 3279 (4th Cir. Feb. 19, 2010)

Pay-when-paid contract clauses are especially risky for subcontractors in these real-estate-crisis times. A Virginia court upheld one as enforceable, which was bad news for a sub who completed all its work but was paid nothing when the project owner ran out of money.


General contractor Turner Construction Company (Turner) hired Universal Concrete Products Corporation (Universal) to install precast concrete on the Granby Tower construction project in Norfolk, Virginia. When Universal completed the work but was not paid the $885,000 due, it sued Turner for contract breach.


The parties? subcontract included a clause stating that Turner would only pay Universal once the project owner paid Turner. Universal did not dispute that provision?s clear language. Instead, it claimed that the subcontract, which incorporated the prime [...]

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