Pay-when-paid clause
A pay-when-paid clause makes the builder's obligation to pay you conditional on the builder first being paid by the principal - and it is void under security of payment legislation in every Australian state and territory.
Void means void: the clause can sit in the signed document and still have no effect on your statutory rights. Variants - "pay-if-paid", payment timed to the builder's receipt of funds - are caught by the same provisions.
Why it matters to subbies
"We haven't been paid yet" is a cash-flow explanation, not a legal defence. Your payment claim machinery runs regardless of what is happening above your contract.
Keep reading
General information for Australian subcontractors, not legal advice - contract drafting and state legislation vary and change; your document and your state's Act govern. Written by Mat Kennedy at The Construction Contracts Co.