Pay-if-paid clause
A contract clause that states payment to a subcontractor is contingent on the prime contractor receiving payment.
Pay-if-paid clauses can create significant cash flow challenges for subcontractors, as payment is contingent on the contractor receiving payment from the owner. Understanding these clauses is crucial, as they can delay payments and affect financial stability, especially for smaller businesses.
Used in a sentence
We're protected by a pay-if-paid clause, so payment depends on us receiving funds first.
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