Wm. R. Clarke Corp. v. Safeco Insurance of America

Opinion

KENNARD, J.

In recent years, general contractors in California have begun to insert “pay if paid” provisions into their agreements with subcontractors. A pay if paid provision makes payment by the owner to the general contractor a condition precedent1 to the general contractor’s obligation to pay the subcontractor for work the subcontractor has performed.

In other jurisdictions, the majority view is that, if reasonably possible, clauses in construction subcontracts stating that the subcontractor will be paid when the general contractor is paid will not be construed as establishing true…