State Contracts - Prohibited Provisions - Exemptions

Limits on Maryland state contract terms

Beginning July 1, 2026, Maryland state contracts cannot include certain clauses unless State or federal law requires them. Banned terms include making the State indemnify or defend without an appropriation; binding arbitration or other binding non‑court dispute rules; and picking a venue outside Maryland courts. Also banned are limits on the State’s recovery for injury, death, or property damage caused by another party; terms unknown at signing, changeable by the other party, or accepted electronically by an unauthorized employee; requiring counsel other than the Attorney General unless allowed; terms that conflict with Titles 3 or 4 of the General Provisions or that §7‑237 prohibits; automatic renewals that obligate funding in future fiscal years; and limits on recovering extra costs when a replacement contractor finishes the work. Any banned clause is void from the start and the rest of the contract stays in force. If a contract has a banned clause, Maryland law governs despite any choice‑of‑law term. Two narrow exemptions apply: contracts for buying, redeveloping, or operating a racing or training facility site defined in law, and Office of International Trade contracts for international business development under §3‑303.