Pay when Paid: Part VIII

A subcontractor should also examine other documents that are incorporated by reference into its subcontract.  For example, on many commercial projects, the prime contract is often incorporated into the subcontract.  The prime contract may conflict with the pay when paid provision contained in the subcontract.  For example, there may be a valid pay when paid clause in the subcontract, but the prime contract requires the prime contractor to pay subcontractors before receiving payment from the owner.  In this case, courts have held that the pay when paid clause is deemed ambiguous because of this incorporation of other payment provisions.  See O.B.S. Co., Inc. v. Pace Construction Corporation, 558 So.2d 404 (Fla. 1990).  The courts state that payment must be made within a reasonable time.  The courts often construe payment within a reasonable time as whatever the normal payment cycle is.  Payment within a reasonable time can be anywhere from the date of the invoice submitted to 45 days or longer depending on how the subcontractor is normally paid and what the court deems reasonable. 

Trenton H. Cotney
Board Certified in Construction Law

Trent Cotney, P.A.

1207 N Franklin St, Ste 222

Tampa, FL 33602

(813) 579-3278

www.trentcotney.com