In a pay-when-paid clause, which risk does the clause primarily place on consultants when the owner delays payments?

• A. Risk of interest charges for late payment.
• B. Potential termination of engagement.
• C. Delay in receiving fees until the owner’s payments are received.
• D. Payment disputes with the owner.

Answer: (C)

The main idea here is cash-flow risk. A pay-when-paid clause makes your payment contingent on the owner first paying the contractor. That means your fees can be delayed simply because the owner hasn’t released funds yet. You’re waiting for the owner’s money before you get paid, which can create significant gaps in your cash flow.

So the correct interpretation is that you face a delay in receiving fees until the owner’s payments are received. The other possibilities aren’t the primary effect of this clause: it doesn’t inherently impose interest charges, terminate your engagement by itself, or guarantee resolution of disputes—the clause’s core impact is the timing of payment tied to the owner’s payment.