Subcontractor Payment Clause Comparison: Northeast versus Southeast States
The objective of this study was to identify the contingent payment language that subcontractors could take advantage of when executing contracts in the Northeast and the Southeast United States. Data for this study was collected from court cases and statutes to analyze court interpretation of the language contained in contracts. The prime beneficiaries of this study were subcontractors who learned the specific contingency language that affected their potential payments from a contractor not paid by an owner and the varying impact of that language in each state. The results of the study indicated that some states followed a pay-when-paid interpretation, others pay-if-paid and still others enacted statutes that deemed such clauses unenforceable as a matter of public policy. States considered in the study included Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Alabama, Georgia, Florida, North Carolina, South Carolina and Tennessee. While the vast majority of southeast states do not enforce pay-if-paid clauses, more mixed results are found in the northeast.
57th Annual Associated Schools of Construction International Conference