A Pay-When-Paid clause is a common provision in construction contracts that dictates when a contractor will be paid by the project owner. This clause typically states that the contractor will only be paid once the owner has received payment from the project's funding source. In other words, the contractor's payment is contingent upon the owner being paid first. This type of clause is often used to shift the risk of non-payment from the owner to the contractor.The purpose of a Pay-When-Paid clause is to protect the owner from financial risk by ensuring that they are not obligated to pay the contractor until they have received payment themselves. This can be particularly important in cases where the project is funded by a third party, such as a government agency or financial institution