Pay when paid: definition and example
A clause making your payment depend on your main contractor being paid.
By Jack Butler-Kettle · Updated
Guidance for England and Wales. Check the contract, amendments and facts that apply to your job.
What it means in practice
Read this alongside section 113 of the Housing Grants, Construction and Regeneration Act 1996.
For construction contracts within the relevant statutory regime, payment generally cannot be made conditional on the payer receiving payment from someone else. The legislation contains a specified insolvency exception. Other conditional-payment wording and agreements outside the regime require their own analysis.
Do not accept an upstream payment problem as the whole answer. Late payment recovery can help examine the payment obligation and the reason given for withholding money.
Worked example
The facts
A main contractor says it will pay a subcontractor only when the employer pays it.
What happens
The subcontractor checks the applicable statute and the actual subcontract clause.
It establishes whether any relevant insolvency facts or other exceptions change the position.
What this shows
The explanation is tested against the payment rules rather than treated as an automatic defence to non-payment.