Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Pay when paid definition

What does Pay when paid mean? A “pay when paid” clause makes a payer’s obligation under a construction sub‑contract contingent on first receiving payment from an upstream party (typically the employer). It is a descriptive label rather than a defined term, but is regulated by statute. In England and Wales and Scotland, section 113 of the Housing Grants, Construction and Regeneration Act 1996 (as amended) renders such conditional payment provisions ineffective, except where the reason for upstream non‑payment is the insolvency (as defined in section 113) of the employer or other specified third party. Northern Ireland has an equivalent prohibition and insolvency exception under the...

Prohibitions on 'pay when paid' and 'pay when certified' clauses under HGCRA 1996: insolvency and management exceptions; contractual consequences (England, Wales and Scotland)

Published by a LexisNexis Construction expert

Practice notes

This Practice Note reviews ‘Pay when paid’ and ‘Pay when certified’ provisions in construction contracts, together with the relevant parts of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996). In particular, it covers:

HGCRA 1996, s 113—which bans pay when paid clauses, save where a third party has become insolvent
HGCRA 1996, ss 110(1A)–(1D)—which prohibit ‘pay when certified’ clauses, introduced by the Local Democracy, Economic Development and Construction Act 2009 (LDEDCA 2009)

Pay when paid clauses

‘Pay when paid’ clauses are provisions that make a payment obligation under a construction contract conditional upon a corresponding payment being received from a third party under a separate agreement...

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Web page updated on 21/05/2026

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