Interpreting the contract language Sample Clauses

Interpreting the contract language. The preceding discussion indicates that a contract term might be interpreted by a court as either an express condition or as a promise, or possibly as both. On the other hand, a term that defines a performance obligation by reference to the happening of some event may be neither a promise nor a condition. Thus, in cases where the language of the contract in some fashion links a subcontractor’s right to pay- ment for work performed to the general contractor’s receipt of payment from the owner (sometimes referred to as a “pay-when-paid” clause), the majority of courts have preferred to interpret such language as merely calling for pay- ment within a reasonable time, and not as also conditioning the subcontrac- tor’s right to payment on such prior receipt of payment by the general. To rule otherwise, the courts have pointed out, would require the sub to assume the risk of the owner’s credit, with the accompanying possibility of forfeiture. To achieve that result, strong language to that effect will be needed (and even then may be not effective). For example, in Xxxxxxxx Corp. v. X.X. Xxx- xxxx Const. Co., 464 S.E.2d 349 (Va. 1995), the court stated: “[W]e hold that in the absence of a clear and unambiguous statement of the parties’ intent as to the meaning of the time of payment provision in a construction subcon- tract, an absolute ‘pay when paid’ defense is available to a general contractor only if it can establish by parol evidence that the parties mutually intended the contract to create such a defense.” Id. at 356. See also Federal Ins. Co. x.