A.L. Prime Energy Consultant, Inc. v. Mass. Bay Transport Auth., 479 Mass. 419 (May 2, 2018)
In a case of first impression, the Massachusetts Supreme Court held that general contract principles, and not federal case law, govern the treatment of termination for convenience clauses in state procurement contracts.
In January 2015, the Massachusetts Bay Transportation Authority (“MBTA”) issued an invitation for bids for the supply of ultra-low sulfur diesel fuel for a two year term. Following bidding, the MBTA awarded the contract to A.L. Prime Energy Consultant, Inc. (“Prime”) in July 2015. The contract included a termination for convenience clause that provided:
The [MBTA] may, in its sole discretion, terminate all or any portion of this Agreement . . . at any time for its convenience and/or for any reason by giving written notice to the Contractor thirty (30) calendar days prior to the effective date of termination. . . . (emphasis added).
Approximately a year later, the MBTA determined that it could acquire its fuel supply from a different supplier at a lower price. Accordingly, the MBTA notified Prime of its intent to terminate the contract for convenience.
Prime sued the MBTA, asserting breach of contract and breach of the covenant of good faith and fair dealing. Prime argued that the MBTA’s...
