Paid-When-Paid
The sub's payment is delayed — not eliminated — until the GC is paid.
What it means
A paid-when-paid clause ties the timing of the general contractor's payment to a subcontractor to the GC's receipt of payment from the owner — the GC pays within so many days of being paid. Courts commonly read these clauses as affecting timing only: if the owner never pays, the GC still owes the sub after a reasonable time. That is the key difference from paid-if-paid, which tries to eliminate the obligation entirely; where the line is drawn varies by state.
Why it matters before you sign
The difference between 'when' and 'if' can be the difference between a late check and no check — read contingent-payment language carefully and know which one you are agreeing to.
In a contract, it looks like this
The subcontract promised payment within ten days of the GC receiving the corresponding payment from the owner — a paid-when-paid term.
This definition is a general, educational explanation — not legal advice. XOsign provides AI-assisted document tools and does not provide legal advice; consider consulting a qualified attorney for guidance on your specific situation. Requirements vary by state.
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