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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Real Property - Transactions

Date & Time
  • event Date

    Tuesday, November 21, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00
CLE
ALL

This CLE webinar will guide construction counsel on best practices when negotiating and drafting contractual payment provisions for contractor, subcontractor, or supplier clients in the construction industry. The panel will discuss stop work provisions and highlight key differences between paid-if-paid (PIP) and paid-when-paid (PWP) clauses as well as address jurisdictional concerns. The panel will also provide an overview of nonpayment enforcement remedies under these contractual provisions as well as others such as under general contract and common law.

Faculty

Scott D. Cahalan
Partner
Smith Gambrell Russell

Mr. Cahalan has substantial experience representing owners, contractors, subcontractors, engineers, architects, suppliers, manufacturers and vendors in connection with construction, commercial and other business matters. His practice primarily consists of drafting and reviewing construction contracts, providing advice during construction and construction litigation, arbitration and mediation. Mr. Cahalan was the primary drafter of the Associated Owners and Developers’ AOD 2002 – Standard Form of Agreement Between Owner and Contractor Where the Price Is Fixed or Lump Sum, and the Associated Owners and Developers’ AOD 2003 – Standard Form of Agreement Between Owner and Contractor for Work on a Cost Plus Fee Basis With a Guaranteed Maximum Price. He has also given numerous seminars throughout the U.S. and Europe concerning construction contracts, implied contract obligations, claims, green building, construction insurance, and mechanics lien law. Since 2010, Mr. Cahalan has been an instructor at the Georgia Institute of Technology where he teaches Design and Construction Law.

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William D. Wickard
Of Counsel
K&L Gates, LLP

Mr. Wickard concentrates his practice on construction and commercial litigation along with negotiating and drafting construction contracts. He has worked on a wide variety of projects (both international and domestic), including oil and gas, offshore oil production facilities, power plants, manufacturing plants, railroads, solar power facilities, wind farms, water treatment plants, steel mills, dams, and health care facilities. Mr. Wickard has been involved in all phases of litigation in a number of state and federal courts, including jury trials, bench trials, injunction and TRO proceedings. He also has handled numerous appeals in several different state and federal jurisdictions. Mr. Wickard also has significant experience with arbitration proceedings. Mr. Wickard has also drafted and negotiated numerous construction contracts, including EPCs, subcontracts, design contracts, and supply contracts, for many different domestic and international projects. Mr. Wickard also represents clients in connection with public procurement issues and has extensive experience in all phases of bid protest proceedings throughout the country.

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John McNamara
Founding Partner
Lane McNamara, LLP

Mr. McNamara’s practice areas include construction law, employment law, suretyship, trial practice and insurance defense. He has tried numerous cases in state and federal courts before juries and judges and has argued before the Supreme Judicial Court of Massachusetts, the Appeals Court of Massachusetts, and the United States Courts of Appeal. The Martindale-Hubbell National Law Directory has awarded Mr. McNamara an AV Rating, the highest rating for legal ability and professional ethics. He has also been named a New England Super Lawyer by Law & Politics and Boston Magazine; this designation is limited to the top 5% of attorneys in New England. Mr. McNamara has been an invited speaker at the Construction Industries in Massachusetts, Associated Builders and Contractors of Massachusetts, Massachusetts Electrical Contractors Association, and Massachusetts Continuing Legal Education.

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Description

In a volatile real estate market, nonpayment in construction projects is becoming more common. Therefore, well drafted payment provisions in construction contracts are imperative to ensure parties are paid in a timely manner, or alternatively, have appropriate remedies at their disposal if they are not paid.

Three of the most common provisions relating to payment in construction contracts are stop work, PIP, and PWP provisions. Stop work provisions inform all parties about the consequences for slow or non-payment and typically include, among other things, a timeline or process for stopping the project. Without a well drafted stop work clause, suspension of work could result in liability for the non-paid party.

PIP and PWP provisions establish when lower-tier subcontractors and suppliers are paid. A PIP provision is a condition precedent that requires payment from the owner to the general contractor or higher-tier subcontractor before payment is made to the lower-tier subcontractor or supplier. PIP clauses shift the risk of nonpayment to the lower-tier subcontractors or suppliers. Jurisdictional enforceability of PIP clauses varies greatly.

On the other hand, PWP clauses are essentially timing provisions that allow the general contractor or higher-tier subcontractor a reasonable amount of time to comply with its duty to pay the lower-tier subcontractor or supplier, but it does not extinguish the responsibility for payment. PWP clauses are also jurisdiction sensitive. Therefore, counsel should clearly understand the jurisdictional treatment for both provisions as well as how these provisions may interact with other enforcement rights. For example, in some states where PIPs are allowed, the provision may not be enforceable where a mechanics lien has been filed.

In the event of nonpayment, counsel should be aware of enforcement mechanisms under these contractual provisions as well as others such as those under general contract and common law.

Listen as our expert panel provides best practices for negotiating and drafting payment provisions in construction contracts and addresses various enforcement mechanisms in the event of nonpayment.

Outline

  1. Overview of construction payment provisions
  2. Prompt payment laws
  3. Stop work clause
  4. PIP vs. PWP clauses
    1. Jurisdictional considerations
    2. State law update
    3. Case law update
    4. Possible effects on other remedies
  5. Nonpayment enforcement remedies
    1. Stop work, PIP, and PWP
    2. General contract law
    3. Common law
    4. Mechanics lien
    5. Prompt payment laws
  6. Best practices for mitigating the risk of nonpayment

Benefits

The panel will review these and other important considerations:

  • What are the differences between stop work, PIP, and PWP provisions and what are key drafting considerations for each?
  • What are jurisdictional considerations for PIP and/or PWP provisions in contracts?
  • How do contractual payment provisions interact and possibly affect other remedies such as mechanics liens?
  • What other nonpayment enforcement mechanisms are available to counsel outside of stop work, PIP, and PWP provisions?