Young Electrical Contractors, Inc. v. Dustin Construction, Inc.Annotate this Case
The award of summary judgment in favor of the general contractor against the subcontractor in this case based on a pay-if-paid clause was improper because the pay-if-paid clause did not apply to the issues in this case.
Pay-if-paid clauses make the project owner’s payment of the general contractor a condition precedent of the general contractor’s obligation to pay the subcontractor. Thus, the pay-if-paid clause can relieve the general contractor of liability to the subcontractor even where the subcontractor has fully performed its part of the subcontract. Here, Subcontractor sued General Contractor for breach of contract relating to a construction project. The circuit court granted summary judgment to General Contractor, concluding that, under Virginia law, a pay-if-paid provision in the subcontract applied to the damages sought. The Supreme Court reversed and remanded the case, holding (1) the pay-if-paid clause did not necessarily apply to the costs at issue in this case; and (2) the other provision relied upon by the circuit court did not create a condition precedent for payment of subcontractors.