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Why Construction Subcontractors Should Avoid “Pay When Paid” Contracts

Web Admin - Thursday, February 28, 2019
Rolling Meadows civil litigation attorney breach of contractAs a construction subcontractor, you need to be careful about how your contracts are written, or you could expose yourself to substantial risk of non-payment. One particular clause to watch out for when signing a subcontractor construction contract is the clause which specifies the circumstances of payment, also known as a payment contingency clause. This provision may take the form of either “pay when paid” or “pay if paid,” and there is a meaningful legal difference between the two.

What Is a “Pay When Paid” Clause in a Construction Contract?


It is a generally accepted practice in the construction industry that a subcontractor gets paid only after the general contractor gets paid by the property developer. If a project developer fails to pay the general contractor on time or at all, the subcontractor is also at risk of being paid late or not at all, depending on how their contract is written.

Most state courts, including Illinois, have ruled that a “pay when paid” clause does not excuse the general contractor from paying subs in the event that the property developer does not pay the general contractor. Rather, a “pay when paid” clause may be interpreted as merely specifying an approach for the timing of payments, i.e., the number of days between the time when the general contractor receives payment from the property developer and distributes payments to subcontractors.

In contrast, a “pay if paid” clause is interpreted by the courts as meaning that subcontractors will not be paid unless and until the general contractor is paid by the property developer. This shifts the risk of non-payment from the general contractor to the subcontractor. As long as the contract language is precisely written and makes it clear that the subcontractor accepts the risk that they will not be paid if the general contractor is not paid, the courts will enforce a “pay if paid” clause. If there is any ambiguity, the courts could order payment to a subcontractor even if the general contractor is not paid.

Why Should Construction Subcontractors Object to “Pay If Paid” and “Pay When Paid” Contracts?


Because the general contractor controls access to the work, they often have the leverage to demand that subcontractors accept contingent payment clauses in their contracts. However, if you are a subcontractor, it is not in your best interests to accept a “pay if paid” or “pay when paid” clause in your contracts. You are legally obligated to pay for all of your equipment and labor expenses, so you need to protect your right to be paid by the general contractor in a timely manner. 

Because they are in direct contact with the property developer, the general contractor has a greater ability than a subcontractor to assess the property developer’s finances and ability to pay. Therefore, it is only right that the general contractor should bear the risk of late payment or non-payment by the developer.

Contingent payment clauses can make it harder for you to obtain payment if the property developer breaches their contract with the general contractor. Because your contract is with the general contractor, you have no standing to sue the property developer for failure to pay. Your only recourse is typically to secure a mechanic’s lien against the property developer. The Illinois mechanic’s lien act, 770 ILCS 60/21(e), specifically protects your right as a subcontractor to file a lien even if your contract with the general contractor has a payment contingency clause. 

Consult a Palatine Construction Contracts Lawyer


It is far more cost-effective in the long run to have a lawyer review your contracts before you sign them rather than to sue someone for breach of contract after a deal goes bad or to go after money owed to you by obtaining a mechanic’s lien. Call an experienced Arlington Heights civil litigation attorney at 847-934-6000 for a free initial consultation about your current legal needs. At Drost, Gilbert, Andrew & Apicella, LLC, we have the experience in both contract law and real estate law to support a wide range of legal needs for real estate developers and construction companies. 

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.


Sources:
https://www.constructconnect.com/blog/construction-law/legally-speaking-construction-contracts-pay-if-paid-pay-when-paid-clauses/
http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=077000600K21
https://www.natlawreview.com/article/construction-group-news-extremely-clear-pay-if-paid-clause-enforced

How to Obtain Compensation for a Head Injury Caused By Negligence

Web Admin - Thursday, February 14, 2019
Schaumburg brain injury attorneyAs recently as 20 years ago, if someone was struck on the head hard enough to become confused or unconscious, they might not even visit a hospital emergency room. A concussion was considered a relatively minor injury with only mild, short-term effects, such as a headache for a few days. Today, a concussion is considered a traumatic brain injury (TBI), and the potentially severe and long-term consequences of these injuries are much better understood. 

These consequences can include severe headaches, balance problems, cognitive difficulties, seizures, sleep disorders, and an increased risk of developing brain disorders such as Alzheimer’s and related forms of dementia, Parkinson’s disease, and Chronic Traumatic Encephalopathy (CTE). As a result, if you have suffered a head injury as a result of another party’s negligence, you may be entitled to substantial compensation.

Incidence and Causes of Traumatic Brain Injury


The U.S. Centers for Disease Control and Prevention (CDC) is a government agency charged with studying and making recommendations about serious health issues such as TBI. The CDC is still working on the development and implementation of a system to accurately measure the incidence of TBIs in the U.S., so the data available is currently rather limited.

During the years 2001 to 2010, the rate of emergency department (ED) visits for TBIs jumped substantially from 421 ED visits per 100,000 people in 2001 to 716 visits per 100,000 people in 2010. ED visits rose most dramatically after 2007, presumably due to increased media attention given to the long-term effects of concussions suffered by pro football players and members of the military. 

An estimated 1.7 million people suffer a TBI in the U.S. each year, while 5.3 million Americans currently live with a disability caused by a TBI. The leading causes of TBI are motor vehicle crashes, falls, and blows to the head involving an object or another person. Many falls and blows to the head result from sporting activities, and some are due to criminal assaults. Falls are most serious among people age 60 and older.

Compensation for Traumatic Brain Injury Caused by Negligence


In order to obtain compensation for a TBI, you must be able to show that you suffered serious injury as the result of an accident or event that can be directly attributed to someone else’s negligence. You generally must file a personal injury lawsuit within two years of the date of the accident (735 ILCS 5/13/202).

Here are a few examples of situations in which you might have a valid claim for damages resulting from a head injury:

- You sustained a concussion in a car crash caused by a drunk driver, and you have suffered lasting effects, such as severe headaches and memory issues.

- You suffered a TBI in a fall in a store, and the main reason you fell is that the store was negligent in maintaining safe conditions for their customers.

- You suffered a blow to the head during a fight in a bar in which the person who struck you behaved recklessly and intentionally.


Consult an Arlington Heights Head Injury Attorney  


If you have suffered a traumatic brain injury in a fall, collision, or other event caused by someone else’s negligence, it is important that you seek immediate treatment and diagnosis, as well as long-term care to document the full extent of your injuries. In order to file a claim for compensation from the negligent party, you will need evidence of their negligence as well as documentation of the specific injuries you sustained. 

To determine if you have a valid claim, consult with a knowledgeable Palatine personal injury lawyer. The law firm of Drost, Gilbert, Andrew & Apicella, LLC can help you obtain full and fair compensation for your injuries. Call 847-934-6000 to schedule a free consultation.

Ken ApicellaAbout the Author: Attorney Ken Apicella is a founding partner of DGAA focusing in the areas of personal injury, employment, insurance coverage disputes, and civil litigation. Ken earned his J.D. from DePaul University College of Law in 1999. He has been named a SuperLawyers Rising Star and a Forty Illinois Attorneys Under Forty to Watch. Ken has written and lectured for the Illinois Institute for Continuing Legal Education and regularly serves as a moderator at Northwest Suburban Bar Association's Continuing Legal Education seminars.



Sources:
https://www.cdc.gov/traumaticbraininjury/get_the_facts.html
https://www.aans.org/Patients/Neurosurgical-Conditions-and-Treatments/Traumatic-Brain-Injury

Understanding the Discovery Process in Personal Injury Lawsuits

Web Admin - Thursday, February 07, 2019
Rolling Meadows personal injury lawyer discovery processIf you have suffered severe damages as a result of someone else’s negligence or malfeasance, you have the right to file a personal injury lawsuit to recover compensation from the at-fault party. In order to win your case, however, your lawyer will have to develop a strong set of facts and arguments through a legal process known as discovery

For example, if you are injured in a collision involving your car, an SUV, and a large commercial truck, some of the questions that will have to be investigated and argued include:

- What percentage of the fault for the collision should be attributed to each party involved in the crash, including the company that owns the commercial truck and employs its driver? 

- Exactly what physical injuries did you suffer as a result of the collision? 

- What are your reasonable medical expenses to recover from those injuries?

- Did the accident leave you with any permanent disfigurement or disability? 

- What other damages did you suffer, such as emotional trauma requiring psychotherapy or lost income from being unable to work?


The legal process through which the parties to a lawsuit exchange information and answer questions such as these is called discovery. Discovery has two phases: sharing of written documents and oral interviews known as depositions.

Written discovery typically involves three types of documents:

- Interrogatories - These are essentially questionnaires submitted by one party in the lawsuit to be answered in writing by another party. The questions may be as simple as asking for names, contact information, and relevant insurance information for everyone involved in the accident.

- Requests for production of documents - The other side may request documents such as your medical records, medical bills, records pertaining to your vehicle, and any photographs you may have of the accident scene, your vehicle, and your injuries. Your lawyer may, in turn, request such information from other parties to the lawsuit.

- Requests for admission - This document spells out certain facts of the case and asks that the other party admit or confirm that these facts are

true, so that these facts do not have to be further investigated or proven in court. For example, in an auto accident case, the request might seek to confirm the details of a negligent party’s personal liability insurance coverage, obtain an admission that they were not carrying out duties for an employer at the time of the accident, and seek an admission that it was their negligence that caused the crash.

The purpose of the written discovery phase is to lock down all possible evidence related to your case, including any evidence that the opposing parties may use to support their position. For example, there is typically an insurance company involved, and their objective will be to minimize the scope of your damages and thereby minimize the compensation they have to pay you. 

Depositions


Once written discovery has been completed, your legal team will use that information to ascertain the questions they want to ask in the oral interrogation phase known as depositions. Depositions are expensive, so your legal team will want to prepare a very focused list of questions to ask in each interview. Depositions are made under oath and are generally video-recorded and transcribed. 

You may be surprised to learn that the discovery process in a personal injury case can take as long as six months to a year. While this may seem like a long time to wait for a settlement, a thorough discovery process is crucial to prove who was at fault and demonstrate the full extent of your damages. Most cases are won or lost in discovery, and most cases are settled based on the information that comes out of the discovery process, saving you the additional time and expense of a trial.

A Schaumburg Personal Injury Attorney

  
If you have been injured in a car crash or other accident that was not your fault (or at least less than 50% your fault), be sure to select a Palatine personal injury lawyer who has the skill and experience to handle the discovery process for your type of case and advocate vigorously on your behalf. Contact us at 847-934-6000 to schedule a free consultation.

Ken ApicellaAbout the Author: Attorney Ken Apicella is a founding partner of DGAA focusing in the areas of personal injury, employment, insurance coverage disputes, and civil litigation. Ken earned his J.D. from DePaul University College of Law in 1999. He has been named a SuperLawyers Rising Star and a Forty Illinois Attorneys Under Forty to Watch. Ken has written and lectured for the Illinois Institute for Continuing Legal Education and regularly serves as a moderator at Northwest Suburban Bar Association's Continuing Legal Education seminars.



Sources:
http://www.illinoiscourts.gov/SupremeCourt/Rules/Art_II/ArtII.htm#206

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