## Facts

- A general contractor (Loranger) hired a roofing-deck subcontractor (New England Structures) to install a gypsum roof deck on a school project under a written subcontract.
- The subcontract included a clause allowing Loranger to terminate New England’s right to proceed under specified conditions, after five days’ written notice.
- Performance disputes arose concerning job progress, labor skill levels, and workmanship (including welding and installation details), with each side attributing delays to the other.
- Loranger sent New England a termination telegram stating the termination was due to New England’s repeated refusal or inability to provide enough properly skilled workers to maintain satisfactory progress, effective after the five-day period, and stated Loranger would complete the work and charge resulting costs and damages to New England.
- New England responded that delays were caused by Loranger’s failure to provide approved drawings and by changing instructions, and asserted it was willing and able to complete the work within the notice period.
- Loranger hired a replacement subcontractor at greater expense and sought to recover the added completion costs and other damages from New England.
- The contractor’s action against the subcontractor and the subcontractor’s cross-action for wrongful termination were consolidated for jury trial, which resulted in verdicts for New England in both actions, including a monetary award to New England.
- Loranger appealed based on alleged errors in the jury instructions, including instructions limiting Loranger to the single termination ground stated in the telegram and treating the five-day notice as affording New England a right to continue work to cure defaults.

## Issues

1. Whether a terminating party is limited in later litigation to the specific termination reason stated in its notice, or may rely on other grounds existing at the time of termination absent bad faith or detrimental reliance.
2. Whether a five-day written notice requirement before termination in a construction subcontract functions as a cure period requiring the terminating party to permit continued performance during the notice period.

## Decision

- The Supreme Judicial Court sustained Loranger’s exceptions to the jury charge and ordered a new trial.
- The court held that Loranger was not confined to the single reason stated in the termination telegram and could assert other justifications for termination unless New England proved bad faith or detrimental reliance.
- The court held that the five-day notice provision was not intended as a cure period and should not have been treated as giving New England a right to continue work during the notice period to remedy alleged defaults.
- Because the jury instructions materially mischaracterized both the permissible grounds for termination and the function of the notice clause, the verdicts could not stand.

## Legal Principles

- A party terminating a contract for breach may defend the termination by asserting all grounds that existed at the time of termination, even if not stated in the termination notice.
- The terminating party is estopped from asserting unstated grounds only if the non-terminating party shows detrimental reliance on the stated reason(s) or shows bad faith in the omission.
- A contractual notice requirement before termination does not, without clear language, create a cure period; a short notice period in a construction context may be construed as advance warning rather than an opportunity to correct performance.
- Erroneous jury instructions that restrict available termination justifications without a reliance/bad-faith basis, or that convert a warning notice into a cure right, require a new trial when they may have affected the verdict.

## Conclusion

The court ordered a new trial because the jury was incorrectly instructed that the contractor could rely only on the termination reason stated in its notice and that the five-day notice provision gave the subcontractor a right to keep working to cure alleged defaults; absent bad faith or detrimental reliance, the contractor could assert additional grounds, and the notice clause functioned as warning rather than a cure period.


New England Structures, Inc. v. Loranger, 354 Mass. 62, 234 N.E.2d 888 (Mass. 1968)