MidAmerica, a subcontractor, sued MasTec and Renegade for refusing to pay for completed work. The contract stated all payments were "expressly contingent upon receipt of payment from Owner." The court upheld this "pay-if-paid" clause as enforceable under Texas and New Mexico law, meaning the general contractor doesn't have to pay the subcontractor until the owner pays the general contractor first. This ruling protects contractors' cash flow but shifts payment risk to subcontractors.
Watch for "expressly contingent upon" language in your contract—this creates a pay-if-paid clause that makes owner payment a condition of your payment, not just a timing issue.
Pay-if-paid clauses are enforceable in Texas and New Mexico, so you cannot force payment if the owner hasn't paid the general contractor, even if you completed your work.