Subcontract Bonding Tip: Pay When Paid

Here is a subtle but important point for insurance professionals who have General Contractor clients or Subcontractors.

We know that the days of the handshake contract are mostly over. In today's highly litigious society, businesses are naive if they do not rely on the services of their attorneys in legal matters and utilize written contractual documents on all their projects.

General Contractors (GC's) have an advantage when entering into contracts with the trade Subcontractors they hire (such as electrical firms, plumbers and HVAC subcontractors). The GC is giving out the work and has an opportunity to control the contract language. For subcontractors, it's harder. They may face a "take it or leave it" scenario with the GC on the contract language.

In a construction contract, a "Pay When Paid" clause is intended to control the GCs obligation to pay the sub. The idea is that, despite any stated payment terms to the subcontractor (such as payment every 30 days), the GC is not expected to pay the sub until the project owner pays them. The assumption is that such contract language means:

"When I get paid, YOU get paid!"

Enter the better alternative: "Pay IF Paid." The difference is important.

Pay When Paid establishes that the GC is obligated to pay, and the timing is governed by receipt of funds from the project owner. Pay If Paid means the GC is NOT obligated to pay the sub UNLESS they receive payment from the project owner - a huge difference.

Here is an example of Pay If Paid wording *:

"It is expressly agreed that owner's acceptance of subcontractor's work and payment to the contractor (GC) for the subcontractor's work are conditions precedent to the subcontractor's right to payments by the contractor (GC)."

How you use this information may depend on the nature of your clientele. Since we are a provider of Performance Bonds for both GCs and subcontractors, we see the issue from both sides.

The IBCS Group, Inc. is the Risk / Claims Manager for the Scarborough Bond and Guarantee Program. The surety has a long history supporting subcontractors - an underserved area of the surety industry. It's one more example of how our high level of capacity and expertise can help insurance professionals serving the construction industry.

We are paperless and always available by phone including nights, weekends and holidays. We're serious about surety bonds.

Steve Golia, Exec. V.P.

The IBCS Group, Inc.

856-673-4135

* We are not attorneys and are not offering legal advice. This article intended to inspire further discussion and is for your enjoyment. Seek legal counsel from an attorney in all matters concerning contracts.

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The Range of Star Wars Merchandise

Star Wars is widely regarded as one of the best science fiction sagas ever told. The legions of fans it has attracted, and the amount of money it has earned reinforces this claim. But it isn't just about movies and films. It has branched off into many other subcategories and genres that you wouldn't expect a science fiction franchise to do.

Let's start from the ground up and take a look at the products for younger kids. You have bed sheets, curtains, dressers, pencils, learning games, back packs, duffel bags, clothing, and pretty much anything else that you could want for school or home. As far as toys are concerned you have action figures of various complexities for different age ranges. You also have model vehicles and play sets to keep your children entertained on the subject.

The Star Wars toys have been in production for some time and the ones that our children play with today are not the ones we grew up with. The ones we had were typically die cast metal figurines that were meant to be posed and the battles imagined, rather then acted out with flexible figures. In addition to the metal figurines you could find metal and plastic models of ships and vehicles. There is currently a debate on amongst collectors about which toys are better; currently there is no end in sight for this debate.

After you move out of the toy related products you can then move onto the more home related ones. Star Wars costumes always show up at Halloween, and there are plenty of posters to go around. Now we come to perhaps the most stimulating of the available merchandise. This would be books, and Star Wars has several hundred of them. Not all of them are set in the same era as the films and many of them have been New York Times Best Sellers.

These range from large hardcover novels to small comic books, needless to say they all bring color and a different perspective to one of our favorite universes. Finally we come to the video game and movie section. Star Wars video games have been around for a very long time, and have advanced with technology. In the early days of gaming it was hard to make a good game based on this franchise simply because of the technological limitations of the time.

As we progressed over the years Star Wars games started to move from the arcade, into the living room. They now are in almost every home and range across all the consoles regardless of age. PS1, PS2, PS3, GameCube, Wii, Game Boy, PSP, Xbox, Xbox 360, and the PC all have numerous Star Wars games on them and make for an entertaining diversion at any time. Of course these wouldn't be complete without films to augment and accompany.

If you need to buy your kindergartner their first backpack there's even a product for that. If you need to buy your teen a game for the holidays there's a product for that too. Books are available for purchase if you're not into films and coloring books are available for your children.

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