New York Public Policy Against Pay-If-Paid Provision Does Not Apply to Contracts Governed by Jurisdictions That Do Not Share That Policy

Welsbach Elec. Corp. v. MasTec N. Am., Inc., 7 N.Y.3d 624 (2006)

Welsbach involved a general contractor engaged to construct a telecommunications network in New York.  The agreement between the general contractor and sub-contractor included a pay-if-paid clause and a Florida choice of law provision.  The New York Court of Appeals decided that New York’s public policy against pay-if-paid contract provisions was not so fundamental that it would override the parties’ choice of law.

The significance of this ruling is that it is now possible for a subcontractor to find that its lien rights are imported if it does business under the law of a non-West-Fair state.