Contracts are how a business makes money and how it limits risk, and Massachusetts has several rules that change what a contract can do. The Commonwealth’s Noncompetition Agreement Act restricts employee noncompetes more than most states, Chapter 93A lets businesses sue one another for unfair or deceptive practices with the possibility of multiple damages, and a contract signed under seal can carry a twenty-year limitations period. A Massachusetts business contracts attorney drafts and reviews agreements with those rules in mind, so the terms a business relies on will hold up if they are ever tested. Holmes Law is the practice of Michael Holmes, an attorney admitted in Massachusetts and five other states, and it drafts and reviews commercial contracts for Massachusetts businesses remotely.
This page covers the Massachusetts contract law points that come up most often in commercial agreements: the Uniform Commercial Code as adopted in Chapter 106, the statute of frauds, limitations periods, choice of law and forum clauses, noncompetition and nonsolicitation covenants, indemnity and limitation of liability clauses, electronic signatures, Chapter 93A, independent contractor classification and construction prompt payment. It sits under the Massachusetts business law practice page. It is general information, not advice about any particular agreement.
Sales of Goods: UCC Article 2 in Chapter 106
Massachusetts has adopted the Uniform Commercial Code as G.L. c. 106, and Article 2 governs contracts for the sale of goods. Article 2 supplies default terms on delivery, risk of loss, warranties, inspection, acceptance and rejection, and remedies whenever the parties’ contract is silent, and it treats merchants differently from non-merchants in several respects. Two provisions matter most in practice. First, the implied warranties of merchantability and fitness for a particular purpose apply unless disclaimed in the manner Article 2 requires, which for merchantability means the disclaimer must mention merchantability and, if written, be conspicuous. Massachusetts adds a consumer-protective twist: G.L. c. 106, § 2-316A restricts the exclusion or modification of implied warranties in sales of consumer goods, so disclaimers common in other states may be ineffective against Massachusetts consumers. Second, the “battle of the forms” rule in § 2-207 means that when two businesses exchange purchase orders and invoices with conflicting boilerplate, the resulting contract may not include either side’s preferred terms. A master agreement signed by both parties avoids that uncertainty.
Contracts for services, software licenses and mixed goods-and-services deals may or may not fall under Article 2 depending on their predominant purpose, which is one reason commercial agreements should state their own warranty, acceptance and remedy terms rather than rely on the Code.
The Massachusetts Statute of Frauds
Some contracts must be in a signed writing to be enforced. The general Massachusetts statute of frauds, G.L. c. 259, § 1, covers categories including contracts for the sale of land or interests in land, agreements not to be performed within one year, promises to answer for the debt of another, and certain other promises. For goods, c. 106, § 2-201 requires a writing for sales of goods for the price of $500 or more, subject to exceptions such as the merchant’s confirmation rule, specially manufactured goods, admissions in court and partial performance. Commercial parties should not rely on oral understandings in any of these categories, and even outside them a written agreement is the best evidence of what was agreed.
Limitations Periods
How long a party has to sue on a contract depends on the kind of contract:
- Ordinary contracts: Six years under G.L. c. 260, § 2 for actions of contract not otherwise limited.
- Contracts under seal: Twenty years under G.L. c. 260, § 1. Massachusetts treats a written instrument as sealed if it recites that it is sealed or executed under seal, under G.L. c. 4, § 9A, so the phrase “executed as a sealed instrument” at the end of a contract can greatly extend the time to sue.
- Sales of goods: Four years under c. 106, § 2-725, which the parties may shorten to not less than one year by agreement but may not extend.
- Chapter 93A claims: Four years under G.L. c. 260, § 5A.
A business reviewing a contract should notice whether the sealed-instrument language is present and whether it wants it. Many Massachusetts form contracts include it by habit, and a party that expects to be the defendant may prefer to omit it.
Choice of Law and Forum Selection
Massachusetts generally enforces a contractual choice of law. In Hodas v. Morin, 442 Mass. 544 (2004), the Supreme Judicial Court followed the Restatement (Second) of Conflict of Laws § 187, under which the chosen law will be applied unless the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the choice, or applying it would be contrary to a fundamental policy of a state with a materially greater interest. Forum selection clauses are enforced when they are fair and reasonable, as the court held in Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572 (1995). Parties who expect complex disputes sometimes choose the Business Litigation Session of the Suffolk County Superior Court, which hears commercial cases that meet its criteria. There is an important exception for noncompetes: § 24L voids a choice of non-Massachusetts law for a covered employee who resided or was employed in Massachusetts for at least thirty days before termination.
Massachusetts Business Contracts Attorney Guidance on Noncompetes
The Noncompetition Agreement Act, G.L. c. 149, § 24L
For employee and independent contractor noncompetes entered into on or after October 1, 2018, the Massachusetts Noncompetition Agreement Act imposes detailed requirements:
- The agreement must be in writing, signed by both the employer and the employee, and expressly state that the employee has the right to consult with counsel before signing.
- For a new hire, it must be provided with the formal offer of employment or ten business days before employment begins, whichever is earlier.
- For an existing employee, it must be supported by fair and reasonable consideration independent of continued employment and provided at least ten business days before it takes effect.
- The restricted period may not exceed twelve months from the end of employment, extendable to two years only if the employee breached a fiduciary duty or unlawfully took the employer’s property.
- It must be supported by a garden leave clause paying at least 50 percent of the employee’s highest annualized base salary within the prior two years during the restricted period, or by other mutually agreed consideration specified in the agreement.
- It is not enforceable against employees classified as nonexempt under the Fair Labor Standards Act, undergraduate or graduate students in short-term employment, employees terminated without cause or laid off, or employees age eighteen or younger.
- Geographic reach and scope of restricted activity are presumptively reasonable if limited to the areas and types of services in which the employee worked during the last two years.
The statute also directs that suits to enforce covered noncompetes be brought in the county where the employee resides or, if the parties agree, in Suffolk County, including the Superior Court’s Business Litigation Session. Separate statutes restrict noncompetes for certain professions, including physicians under G.L. c. 112, § 12X and nurses under § 74D.
What the Statute Does Not Cover
Section 24L expressly excludes nonsolicitation agreements covering employees or customers, noncompetes made in connection with the sale of a business by a significant owner, noncompetes outside an employment relationship, confidentiality agreements, invention assignment agreements, and noncompetes in separation agreements if the employee has seven business days to rescind. Those covenants remain governed by Massachusetts common law, which enforces restrictive covenants only if they protect a legitimate business interest such as trade secrets, confidential information or goodwill, and are reasonable in time, space and scope. Because nonsolicitation clauses fall outside § 24L, well-drafted Massachusetts employment agreements often rely on them, together with confidentiality obligations, as the primary protection. The treatment of noncompetes in a sale of an ownership interest is discussed on the page about Massachusetts buy-sell agreements.
Indemnity and Limitation of Liability
Indemnity clauses allocate the cost of third-party claims, and limitation of liability clauses cap or exclude damages between the contracting parties. Massachusetts courts generally enforce both between commercial parties when they are clearly written, but with limits. An exculpatory clause will not relieve a party of liability for its own gross negligence or intentional misconduct, and an indemnity for the indemnitee’s own negligence must be stated clearly. In construction, G.L. c. 149, § 29C voids provisions in covered construction contracts that require a subcontractor to indemnify a party for injuries not caused by the subcontractor or its employees, agents or subcontractors. Drafters should also coordinate the indemnity with insurance requirements, specify defense obligations and notice procedures, and make clear whether the liability cap applies to indemnity, confidentiality breaches and Chapter 93A claims.
Chapter 93A Between Businesses
G.L. c. 93A, § 11 allows a person engaged in trade or commerce to sue another business for unfair methods of competition or unfair or deceptive acts or practices. If the violation was willful or knowing, the court may award up to three but not less than two times actual damages, together with attorney’s fees. Chapter 93A claims are frequently added to Massachusetts contract lawsuits, and conduct such as using a breach of contract to extract concessions the other party did not owe can support liability. Whether a contractual waiver or limitation of 93A claims will be enforced is a contested question, so a business should not assume its liability cap eliminates 93A exposure. Section 11 claims also require that the unfair conduct occur primarily and substantially within Massachusetts. Consumer-facing businesses face separate obligations under § 9, including a pre-suit demand letter procedure.
Electronic Signatures
Massachusetts has adopted the Uniform Electronic Transactions Act as G.L. c. 110G, and the federal E-SIGN Act also applies. Electronic records and signatures are generally as enforceable as paper ones when the parties have agreed to transact electronically. There are exceptions, such as wills and certain other documents, and documents to be recorded at a registry of deeds or filed with a court have their own requirements. A clean e-signature process with an audit trail helps prove who signed and when, which matters if authenticity is later challenged.
Independent Contractor Agreements
A Massachusetts independent contractor agreement cannot by itself make a worker a contractor. Under G.L. c. 149, § 148B, a person performing services is presumed to be an employee unless the business proves all three parts of the statutory “ABC” test: the individual is free from control and direction in performing the service, the service is performed outside the usual course of the business, and the individual is customarily engaged in an independently established trade or business of the same nature. The second prong is stricter than many states’ tests, and misclassification can lead to liability under the Wage Act, including mandatory treble damages. Contractor agreements should be drafted with the test in mind, but the actual working relationship controls.
Construction Prompt Payment
For private construction projects where the prime contract price is $3,000,000 or more, excluding residential projects of one to four units, G.L. c. 149, § 29E requires written contracts to include specific payment timelines, provides that payment applications not approved or rejected in time are deemed approved, and makes most pay-if-paid clauses void. Contractors and owners on covered projects should check that their contract forms comply, because noncompliant provisions are replaced by the statutory terms.
Frequently Asked Questions
How long do I have to sue for breach of contract in Massachusetts?
Generally six years for ordinary contracts, twenty years for contracts under seal, and four years for sales of goods under the UCC, which the parties may shorten to one year. Chapter 93A claims have a four-year period.
Are noncompetes enforceable in Massachusetts?
Employee noncompetes signed on or after October 1, 2018 are enforceable only if they satisfy § 24L, including the twelve-month limit, notice, signature and garden leave or other agreed consideration requirements, and they cannot be enforced against certain employees such as nonexempt workers or those laid off. Nonsolicitation and sale-of-business covenants are governed by common law.
Does Massachusetts enforce a contract’s choice of another state’s law?
Usually, if the chosen state has a substantial relationship to the parties or transaction and applying its law would not violate a fundamental Massachusetts policy. For noncompetes, a choice of non-Massachusetts law cannot be used against an employee who lived or worked in Massachusetts for thirty days before termination.
Can a business sue another business under Chapter 93A?
Yes. Section 11 allows business-to-business claims for unfair or deceptive practices, with double or treble damages for willful or knowing violations and attorney’s fees.
Are electronic signatures valid in Massachusetts?
Generally yes, under G.L. c. 110G and federal law, when the parties have agreed to do business electronically, subject to exceptions for certain documents.
What does “under seal” mean in a Massachusetts contract?
A contract that recites it is sealed or executed under seal is treated as a sealed instrument, which extends the limitations period for suing on it to twenty years.
Speak With a Massachusetts Business Contracts Attorney
A contract that ignores Massachusetts law can fail when it matters most. Michael Holmes drafts and reviews supply agreements, service contracts, employment and contractor agreements, restrictive covenants and other commercial contracts for Massachusetts businesses, and he coordinates them with the company’s operating or shareholder agreement and entity structure. To schedule a consultation, contact Holmes Law.