A California appellate court ruling on an industry standard “pay-when-paid” contract could have major implications about how and when subcontractors are paid for project work. The April 17 judgment held that the pay-when-paid clause violated state public policy and did not provide for payment within a reasonable time.
In the case of Crosno Construction Inc. v. Travelers Casualty, the Fourth District California Court of Appeals found the clause on a public works contract to be “unenforceable,” unreasonably delaying payment to the subcontractor until some “undefined, unspecified point in time.”