The Massachusetts Supreme Judicial Court ruled that state law—not federal law—controls how termination for convenience clauses work in contracts with Massachusetts public agencies like the MBTA. The court held that public entities can terminate these contracts early simply to save money, as long as the contract language allows it. This matters to subcontractors because it means a state or municipal client can cancel your work without breach of contract liability if the contract includes a termination for convenience clause.
Review termination for convenience clauses in all state and municipal contracts before signing. Massachusetts public entities can use them to cut costs without penalty.