Pay-if-paid is the clause every subcontractor should look for first. It says your right to be paid depends on the owner paying the GC, so if the owner stiffs the GC, the loss is on you. Texas courts will enforce pay-if-paid when the contract makes the condition crystal clear, but they often refuse to read it into ambiguous language. These are the Texas appellate opinions that draw the line.
The cases below are organized by outcome and significance. Flagship cases represent the most-cited opinions that have shaped how pay-if-paid clauses are interpreted in Texas courts.
A surety does not owe a common law duty of good faith to its principal, but good faith is a contractual condition precedent to indemnification, requiring proof of improper motive or willful ignorance rather than mere negligence.
Section 2.306 of the UCC does not apply to take-or-pay gas contracts where parties have specified quantity as a determinable amount (85% of delivery capacity), and good faith obligations remain applicable to increases in delivery capacity.
A law firm may recover the reasonable value of its services under quantum meruit despite lacking a signed contingent-fee agreement, but an expert's damages opinion improperly based on the unenforceable agreement cannot support the award.
14 opinions sorted by most cited
| CASE | CITATION | OUTCOME | CITES |
|---|---|---|---|
| Associated Indemnity Corp. v. CAT Contracting, Inc. Texas Supreme Court | 964 S.W.2d 276 (1998) | modified | 765 |
| Lenape Resources Corp. v. Tennessee Gas Pipeline Co. Texas Supreme Court | 925 S.W.2d 565 (1996) | enforced | 252 |
| Albert G. Hill, Jr. v. Shamoun & Norman, Llp Texas Supreme Court | 544 S.W.3d 724 (2018) | remanded | 108 |
| HECI Exploration Co. v. Clajon Gas Co. Court of Appeals of Texas | 843 S.W.2d 622 (1993) | remanded | 90 |
| MidAmerica Construction Management, Inc. v. MasTec North America, Inc. Court of Appeals for the Tenth Circuit | 436 F.3d 1257 (2006) | enforced | 61 |
| Hassell Const. Co., Inc. v. Stature Commercial Co. Texas Court of Appeals, 14th District (Houston) | 162 S.W.3d 664 (2005) | reversed | 54 |
| United States ex rel. Tusco, Inc. v. Clark Construction Group, LLC District Court, D. Maryland | 235 F. Supp. 3d 745 (2016) | enforced | 32 |
| Acierno v. Worthy Brothers Pipeline Corp. Supreme Court of Delaware | 656 A.2d 1085 (1995) | remanded | 19 |
| Urban Masonry Corp. v. N&N Contractors, Inc. District of Columbia Court of Appeals | 676 A.2d 26 (1996) | remanded | 13 |
| Levco Constr., Inc. v. Whole Foods Mkt. Rocky Mountain/Sw. L.P. Court of Appeals of Texas | 549 S.W.3d 618 (2017) | enforced | 9 |
| United States ex rel. Kitchens to Go v. John C. Grimberg Co. District Court, E.D. Virginia | 283 F. Supp. 3d 476 (2017) | modified | 5 |
| Evans, Mechwart, Hambleton & Tilton, Inc. v. Triad Architects, Ltd. Ohio Court of Appeals | 196 Ohio App. 3d 784 (2011) | reversed | 2 |
| Highland Crossing, Lp v. Ken Laster Co. Court of Civil Appeals of Oklahoma | 2010 OK CIV APP 124 (2010) | enforced | 1 |
| In re Makwa Builders, LLC United States Bankruptcy Court, D. New Mexico | 545 B.R. 311 (2016) | modified | 0 |
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