"So, where's my money?" – The Pay-when-Paid
Clause Dilemma
Background
Imagine this. A, B and C are the employer, contractor and
sub-contractor respectively. They enter into a business proposition
where A, being the Employer, asks B to install a machine while B
sub-contracts it to C to complete the installation. The employer
would pay the Contractor and after being paid, the Contractor then
pays the Sub-Contractor the agreed portion or sum. Halfway during
the installation of the machine, the Employer is unable to pay the
Contractor the money for the installation. The Contractor is then
unable to pay the Sub-Contractor because he was not paid by the
Employer in the first place. To make matters worse, the
Sub-Contractor has spent much of his time and money to install the
machine. Not surprisingly, the Sub-Contractor then demands from the
Contractor the money owed to him but the Contractor replies simply
that he will only pay the Sub-Contractor if he gets paid by
