Pennsylvania Lower Court Decision Neutralizes Pay-if-Paid Clauses

In the case Eschbach Bros. V. Contracting Systems Inc. a Superior Court in Pennsylvania decided not to give weight to a trial court's argument that the Pennsylvania Contractor and Subcontractor Payment Act created a pay-if-paid provision in every construction contract.

According to the superior court's ruling, "The parties never argued during trial that the provisions of the Contractor and Subcontractor Payment Act at issue were incorporated into the parties' written contract, contrary to the parties' contract or negated the condition precedent established in the contract. Therefore we find any argument with regard thereto to be waived."

According to Bill Isokait, senior director and counsel, government and industry relations, for the American Subcontractors Association, the ruling from this case emphasizes that subcontractors in Pennsylvania, including glazing contractors, need to be aware of contract language with respect to payment since the state law does not automatically create "pay-if-paid" conditions.

"Subcontractors need to be careful that there is not language in the contract that makes payment to [them] contingent on whether the owner pays the general contractor," he said.


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