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Contracts Keyed to Fuller
Koch v. Construction Technology, Inc.
Facts
Construction Technology, Inc. (Defendant) subcontracted the painting portion of a Memphis Housing Authority (MHA) construction project to Koch (Plaintiff). The subcontract included a “pay when paid” clause, which provided, in part, that “payments subject to all applicable provisions of the Contract shall be made when and as payments are received by the Contractor.” After Plaintiff completed all his work, Defendant paid him $148,110.96 but refused to make additional payments because the MHA had not yet paid Defendant in full. Plaintiff sued for breach of contract. Defendant alleged that it was not obligated to pay Plaintiff because payment by MHA is a condition precedent to Defendant’s obligation to pay Plaintiff. The trial court refused to award Plaintiff the full amount due him under the subcontract. The court of appeals affirmed the judgment, holding that the “pay when paid” clause was a condition precedent to Defendant’s obligations to Plaintiff.
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