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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Real Property - Transactions

Date & Time
  • event Date

    Tuesday, January 24, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00

This CLE webinar will guide construction counsel on best practices when negotiating contractual payment provisions for contractor, subcontractor, or supplier clients in the construction industry. The discussion will highlight key issues for differentiating between pay-if-paid (PIP) versus pay-when-paid (PWP) clauses, recent case law and relevant statutes, and best practices for navigating some of the most challenging and heavily negotiated provisions in construction contracts.

Faculty

Cahalan Scott
Shareholder
Smith Gambrell Russell

Mr. Cahalan has substantial experience representing owners, contractors, subcontractors, engineers, architects, suppliers, manufacturers and vendors in connection with construction, commercial and other business matters. His practice primarily consists of drafting and reviewing construction contracts, providing advice during construction and construction litigation, arbitration and mediation. Mr. Cahalan was the primary drafter of the Associated Owners and Developers’ AOD 2002 – Standard Form of Agreement Between Owner and Contractor Where the Price Is Fixed or Lump Sum, and the Associated Owners and Developers’ AOD 2003 – Standard Form of Agreement Between Owner and Contractor for Work on a Cost Plus Fee Basis With a Guaranteed Maximum Price. He has also given numerous seminars throughout the U.S. and Europe concerning construction contracts, implied contract obligations, claims, green building, construction insurance, and mechanics lien law. Since 2010, Mr. Cahalan has been an instructor at the Georgia Institute of Technology where he teaches Design and Construction Law.

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Borek Erin
Shareholder
Phillips Lytle Llp

Ms. Borek concentrates her practice in the area of civil litigation, with a focus on construction and commercial litigation matters, including breach of contract claims and commercial torts. Her practice also includes personal injury disputes and civil rights litigation. In addition, she represents clients responding to government investigations and regularly advises clients on electronic discovery issues, including organizing and managing complex and high-volume document reviews. She has experience briefing and arguing appeals in both federal and state courts.

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Description

In a PIP provision all payment risk shifts from the general contractor or higher-tier subcontractors to lower-tier subcontractors. This provision provides that the general contractor has no obligation to pay lower-tier subcontractors until the general contractor receives payment from the owner. PIP clauses essentially make the receipt of payment from the owner a condition precedent. Jurisdictional enforceability of PIPs varies greatly, and some states prohibit them and hold them to be void, unenforceable, and against public policy. The enforceability of PIPs in other states is determined on a case-by-case basis.

In contrast, a PWP provision is essentially a function of the timing of payment and not a condition precedent provision. PWPs clauses will typically have specific timing provisions. Ambiguous timing provisions generally allow the general contractor or higher-tier subcontractor a reasonable amount of time to comply with its duty to make payment to a subcontractor or supplier upon the general contractor’s receipt of payment from the owner.

Differentiating between PIP and PWP contractual clauses is immensely important because they can govern whether there is a duty for the general contractor or higher-tier subcontractor to make payment to a subcontractor if payment is never received from the owner. However, both PIP and PWP require construction practitioners to be mindful of the current jurisdictional treatment of these payment provisions, applicable prompt payment laws/acts, and other issues relating to the enforceability of these provisions.

Listen as our authoritative panel of construction attorneys examines the challenging, confusing, and complex payment process. The panel will offer best practices for drafting construction payment provisions that mitigate or shift the risk of non-payment to another party.

Outline

  1. Overview of construction payment provisions
    • PIP clauses
    • PWP clauses
  2. State law update
  3. Case law update
  4. Prompt payment laws/acts, payment exceptions, and other issues
  5. Best practices for avoiding the risk of nonpayment

Benefits

The panel will discuss these and other key issues:

  • How can counsel guide clients in navigating the nuances of construction payment provisions?
  • What is the current jurisdictional treatment of PIP and PWP clauses?
  • What are best practices for the precise drafting of payment provisions?