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ARTICLE · 02 MAY 2023

Where Is The Line Drawn For Conditional Payment Under CIPAA 2012?

The "pay when (if) paid" clause in construction contracts, is now void pursuant to section 35(1) of Construction Industry Payment and Adjudication Act 2012 (CIPAA). Section 35 (1) of CIPAA reads as follows...

MalaysiaReal Estate and Construction

Introduction

The "pay when (if) paid" clause in construction contracts, is now void pursuant to section 35(1) of Construction Industry Payment and Adjudication Act 2012 (CIPAA). Section 35 (1) of CIPAA reads as follows:

35 Prohibition of conditional payment

(1) Any conditional payment provision in a construction contract in relation to payment under the construction contract is void.

(2) For the purposes of this section, it is a conditional payment provision when-

(a) the obligation of one party to make payment is conditional upon that party having received payment from a third party; or

(b) the obligation of one party to make payment is conditional upon the availability of funds or drawdown of financing facilities of that party.

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