Pay-when-paid and pay-if-paid are two contract clauses governing when a general contractor must pay a subcontractor. They sound similar but have very different legal effects.
Pay-when-paid clauses say the GC will pay the sub within a reasonable time after receiving payment from the owner. Most courts interpret this as a timing mechanism, not an absolute condition. The GC must pay the sub within a reasonable time even if the owner never pays.
Pay-if-paid clauses say the GC will pay the sub only if the GC receives payment from the owner. This shifts owner-payment risk from the GC to the sub. Pay-if-paid clauses are enforceable in most states but require explicit, clear language. Several states (California, New York, North Carolina, Wisconsin) have limited or barred pay-if-paid clauses by statute.