How many general contractors can say they've never been involved in a legal action initiated by an owner in 110 years? Paul Hoffman, CEO, of the Hoffman Corp., of Appleton, Wis., is the chairman of the Associated General Contractors of America document committee. This committee is comprised of 50 to 60 members whose duty it is to develop contract documents. The committee officially meets twice a year, at minimum. Within the members, there are 15 active members who participate in contract development.
I asked Hoffman what his personal opinion is on the "pay-if-paid" clauses included in today's subcontracts. Keep in mind that the "pay-if-paid" clause basically means that a general contractor is NOT obligated to pay a subcontractor unless the owner first pays the general contractor. Also keep in mind that Hoffman's company has never been involved in a legal action brought about by an owner in 110 years. In hearing his response, I was shocked. He says, "We believe it's our responsibility to verify the owners ability to pay, therefore our company does not use contracts that include ‘pay-if-paid' clauses."