Business Law: Principles for Today's Commercial Environment 3rd Edition by Marianne Moody Jennings, David Twomey, Marianne Jennings

Exercise 12

Suburban Power Piping Corp., under contract to construct a building for LTV Steel Corp., made a subcontract with Power Pollution Services, Inc., to do some of the work. The subcontract provided that the subcontractor would be paid when the owner (LTV) paid the contractor. LTV went into bankruptcy before making the full payment to the contractor, who then refused to pay the subcontractor on the ground that the "pay-when-paid" provision of the subcontract made payment by the owner a condition precedent to the obligation of the contractor to pay the subcontractor. Was the contractor correct [Power Pollution Services, Inc. v Suburban Power Piping Corp., 598 NE2d 69 (Ohio App)]