This case arose from a public construction contract held by Brait Builders. Costa & Son Construction was awarded a site work subcontract on the project, which content was terminated as a result of Costa’s alleged poor performance. Unhappy with the termination of its subcontract, Costa sued Brait Builders for breach of contract, violation of chapter 93A, and quantum meruit. Costa’s complaint also sought recovery under Brait’s statutory payment bond. At trial, Costa prevailed against Brait Builders on the majority of its claims, but the court denied Costa’s payment bond claim against the surety on the basis of subcontract language that purported to waive Costa’s right to assert a bond claim.
The relevant subcontract language stated that if Costa was unable to provide payment and performance bonds in the full value of its subcontract, its right to assert a bond claim would be deemed waived. On appeal, Costa argued that such provisions were void and unenforceable as a matter of public policy, and the SJC agreed holding that the statute’s strong public policy purpose renders waivers of payment bond claims unenforceable in Massachusetts.
In reaching its decision, the Court recognized the dual purpose of the payment bond statute, namely to give security to those furnishing labor and materials on public projects that are not subject to mechanics liens and to promote the timely and orderly completion of work on public projects. Accordingly, contract provisions, like the one in this case, purporting to strip contractors of their right of security under a payment bond would significantly disrupt public construction, and, therefore, it is in the public interest that contractual waivers of bond claim rights be void.