Koch v. Construction Technology, Inc.
Supreme Court of Tennessee
924 S.W.2d 68 (1996)
Construction Technology, Inc. (CTI) (defendant) subcontracted painting work on a housing-authority project to Koch (plaintiff) under a subcontract with a "pay when paid" clause, providing that payments would be made "when and as payments are received by the Contractor." After Koch finished his work, CTI paid him $148,110.96 but withheld further payment because the housing authority hadn't yet paid CTI in full. Koch sued for breach of contract; CTI argued that the owner's payment was a condition precedent to CTI's obligation to pay Koch. The trial court limited Koch's recovery, and the court of appeals affirmed, treating the clause as a condition precedent.
Whether a 'pay when paid' clause in a subcontract qualifies as a condition precedent to the general contractor's obligation to pay the subcontractor.