Moore Bros. Construction and Lane Construction sued their general contractor Brown & Root and surety Highlands Insurance for unpaid work on the Dulles Toll Road Extension. The court ruled that a surety company cannot hide behind a 'pay-when-paid' clause unless that clause is explicitly written into the payment bond itself. Subcontractors must be paid for completed work even if the general contractor hasn't been paid by the owner.
Always review the payment bond language directly—don't assume the surety can use defenses from the general contractor's subcontract with you
A 'pay-when-paid' clause in your subcontract with the GC does not automatically bind the surety; the surety's bond is a separate contract