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Koch v. Construction Technology, Inc.

Supreme Court of Tennessee
924 S.W.2d 68 (1996)


Facts

Construction Technology, Inc. (CTI) (defendant) subcontracted the painting portion of a Memphis Housing Authority (MHA) construction project to Koch (plaintiff). The subcontract included a “pay when paid” clause, which provided, in part, that “payments subject to all applicable provisions of the Contract shall be made when and as payments are received by the Contractor.” After Koch completed all his work, CTI paid him $148,110.96 but refused to make additional payments because the MHA had not yet paid CTI in full. Koch sued for breach of contract. CTI alleged that it was not obligated to pay Koch because payment by MHA is a condition precedent to CTI’s obligation to pay Koch. The trial court refused to award Koch the full amount due him under the subcontract. The court of appeals affirmed the judgment, holding that the “pay when paid” clause was a condition precedent to CTI’s obligations to Koch.

Rule of Law

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Issue

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Holding and Reasoning (Drowota, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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