Conduit and “Pay When Paid” Clauses on Construction Projects

Construction material suppliers are now often asked to sign a “subcontract” or asked to sign a “purchase order” with many of the same terms found in a labor and material subcontract. It is getting more difficult to require customers on construction projects to sign standard credit agreements. This requires a new skill set.

What do all these terms mean? You are often bound to the terms of the general contract that you have never seen. Understand “Conduit” or “Pass Through” Provisions. What is the difference between a “Pay when Paid” and a “Pay if Paid” Clause? How will this affect the timing of payment or whether you get paid at all? You must know how to use Change Orders and Claims Procedures if you hope to protect yourself from delay and liquidated damage claims or receive additional compensation for delay, design defects or design changes on a project.

http://creditcongress.nacm.org/