The differences between “pay if paid” and “pay when paid” clauses in construction contracts

What is a “Pay When Paid” Clause?

Difference Between Payed and Paid
March 30, at Payed has a common and historical use as a nautical term having to do with ropes and ship hulls. Follow Please login to follow content. Let us take a closer look. Can someone tell me when I should use paid over payed? Salary and hourly wage are two different systems used by employers for remunerating an employee between which some differences can be identified. In other words, if the owner never pays the contractor, the contractor has no duty to pay you.

Recent Posts

Payed or Paid: What’s the Difference?

Please contact customerservices lexology. As attorneys that draft construction contracts and litigate construction disputes on a regular basis, we have seen how construction contract terms are used in contracts and what the practical effects of these terms may be on the rights and obligations of parties to those contracts.

While a previous posting on this site discussed the various pricing methods that may be used in construction contracts, this posting provides a brief overview of two related, but distinct, payment terms that appear in most construction subcontracts, but that are often misunderstood: If you are a prime or sub-contractor, you have likely heard of pay if paid and pay when paid clauses in construction subcontracts, and may have even seen these terms in a contract to which you are a party.

Nevertheless, you may not fully understand what these terms mean, how they differ from each other, and how they each affect your rights and potential liability. The court explained that a "pay when paid" clause i. In contrast, the court found that a "pay if paid" clause i.

The court explained, however, that conditions precedent such as pay if paid clauses are viewed with disfavor by courts and will not be enforced if their terms are ambiguous.

Nevertheless, in Lemoine , the court found that the contract's pay if paid clause was worded in such a way that it was a condition precedent that excused the prime contractor from having any payment obligations to its subcontractor.

As illustrated by the opinion in Lemoine , contractors and subcontractors need to ensure that they understand the full meaning and effect of the clauses contained in their construction contracts, because they will be bound by the language of these clauses.

If you would like to learn how Lexology can drive your content marketing strategy forward, please email enquiries lexology. I often print out articles or otherwise note them for bringing to the attention of my colleagues. In a salary system, you get a fixed amount every month no matter how many hours of work you have put in. Hours do not come into picture when you are salaried, and you get paid a fixed amount every month.

A salaried person may work on weekends and even in nights but he will receive the same pay. This is a disadvantage for the salaried person. However, salaried employee can take a day off on medical grounds and his salary remains the same whereas if he is hourly and reports sick for a day, he may have to forego his remuneration for the day.

One profession where this difference between salary and hourly is exemplified is the teaching profession. Teachers, though many perceive them to be getting lots of holidays , work more than in other professions as they sweat it out even when the school or college is closed for vacations as they prepare grades of students and also their assignments.

But they receive the same salary no matter how much work they put in during vacations. If you are working on an hourly contract, you get compensation for a number of hours you clock plus any overtime you have done in the week. You also get extra for the holidays. A person employed on an hourly basis will receive overtime at the decided rate for any extra hours of work he puts in a week. This is one advantage that hourly employees have over salaried employees. If you have an option of choosing between a salary and an hourly wage system, you can decide based upon how time-consuming the job is.

If there are a number of hours, it is better if you accept the hourly system. There is another advantage that the hourly system has over salary system. While salaried people can be fired easily by their employers, hourly employees need to be given in writing and are difficult to be fired. This highlights that there is a clear difference between salary and hourly.

What is Hourly?

Leave a Reply

If you can’t quite remember from your last English class the difference between these two words, don’t worry; you’re not alone. I’ve received a number of emails from readers asking for an explanation between payed vs. paid, so today I want to talk about those differences. Payed vs Paid. The difference between payed and paid has to do with the acceptance of the word, as well as the meaning of each word. We all know the word paid, which is used to refer to receiving or giving money in exchange for a product or service. Paid is, in fact, the past tense of the verb ‘pay.’ However, some people use another spelling in place . The difference between these two types of payment clauses is significant and highlights the need to carefully review subcontracts with your attorney. Where there is a “pay if paid” clause in a subcontract, the subcontractor and the .