Calif. Construction Contractors Should Specify Payment Time

Law360 (May 4, 2020, 5:54 PM EDT) -- The California Court of Appeal continues to decide appeals during the pandemic, and, particularly, one such appeal that will yet again reshape how construction contracts are drafted in California.

The California Court of Appeal for the Fourth Appellate District's decision in Crosno Construction Inc. v. Travelers Casualty and Surety Company of America undercuts the enforceability of pay-when-paid provisions that effectively provide for open-ended delay in payment to lower-tiered contractors.

Pay-if-paid provisions (not to be confused with pay-when-paid provisions) were held unenforceable as contrary to public policy by the California Supreme Court in 1997.[1] These provisions made payment by the owner to...

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