Pay-When-Paid Is Not a Valid Excuse in Malaysia (CIPAA s.35). What You Can Do.

Short answer: “I’ll pay you when my customer pays me” is not a lawful excuse to delay payment. In construction contracts, “pay-when-paid/conditional payment” clauses are void and unenforceable under CIPAA 2012, s.35(1). In other sectors, unless a clear written agreement makes payment genuinely conditional (and even then, it’s often challengeable), the debtor still owes you on time.

What “Pay-When-Paid” Means (and why it fails)

• Also known as “conditional payment” (aka bayar bila dibayar / pay when paid Malaysia).

• Without a clear, written, agreed clause, it’s not a defence to non-payment.

• Construction industry: Section 35(1) CIPAA 2012 invalidates “pay-when-paid/pay-if-paid” clauses, so contractors and subcontractors can pursue adjudication for progress claims regardless of upstream payments.
  

What To Do If a Debtor Uses This Excuse

1. Pin them down in writing. Reply that payment is due regardless of their customer; ask for a firm date. Keep all emails/WhatsApp.

2. Issue a formal Letter of Demand. State the sum due, contract basis, due date, and any late-payment interest.

3. For construction claims: Start CIPAA adjudication—fast timelines, enforceable decision; “pay-when-paid” won’t block you.

4. Consider security. Request personal guarantees, post-dated cheques, or a part-payment plan with dates.

5. Escalate if needed. Garnishee, seizure, or winding-up/insolvency routes may apply for companies.
   

Don’t Let It Slide

This line is often a delay tactic signalling cash-flow stress or poor financial management. The longer you wait, the harder recovery gets.

FAQs

Is “pay-when-paid” legal in Malaysia? Only if explicitly agreed in writing outside construction—and even then, courts scrutinise it. In construction, it’s void (CIPAA s.35(1)).

I’m a subcontractor and my main-con isn’t paid. Can I still claim? Yes. Under CIPAA, you can pursue adjudication despite any “conditional payment” wording.

Can I charge interest or late fees? If your contract provides for it—yes. If silent, statutory or court-awarded interest may apply.

Do I have to sue? Not always. Adjudication (construction) or a firm demand + negotiated plan often moves payment without full litigation. Article Keywords:

• What “Pay-When-Paid” Means in Malaysia

• CIPAA 2012 s.35: Conditional Payment Clauses Are Void

• Practical Steps to Recover Your Payment

• FAQs: Conditional Payment & Debt Recovery

• pay when paid Malaysia / conditional payment clause Malaysia

• CIPAA 2012 section 35 / CIPAA s.35(1)

• construction payment dispute Malaysia / subcontractor not paid

• debt recovery lawyer Malaysia / letter of demand Malaysia

• adjudication Malaysia / construction progress claim

• “bayar bila dibayar” (BM term)

• enforce payment / late payment interest Malaysia

• Is pay-when-paid enforceable in Malaysia?

• Can a subcontractor claim payment if the main contractor isn’t paid?

• How does CIPAA adjudication work for unpaid progress claims?

• What to do when a client delays payment due to cashflow?
  

Need help recovering a debt or an unpaid progress claim? We act fast and structure the right legal pressure to get cash flowing—often without filing a suit. Whatsapp us at +6010-2028095 with your invoice/contract and timeline; we’ll outline your best next step.