State Contracts - Prohibited Provisions - Exemptions

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0300*

HOUSE BILL 300
P2 6lr0258
(PRE–FILED) CF SB 77
By: Chair, Government, Labor, and Elections Committee (By Request –
Departmental – Commerce)
Requested: October 1, 2025
Introduced and read first time: January 14, 2026
Assigned to: Government, Labor, and Elections
Committee Report: Favorable
House action: Adopted
Read second time: February 22, 2026

CHAPTER ______

AN ACT concerning 1

State Contracts – Prohibited Provisions – Exemptions 2

FOR the purpose of exempting certain contracts entered into by the Office of International 3
Trade from certain prohibitions on the provisions that may be included in State 4
contracts; and generally relating to State contracts. 5

BY repealing and reenacting, with amendments, 6
Article – State Finance and Procurement 7
Section 2–901 8
Annotated Code of Maryland 9
(2021 Replacement Volume and 2025 Supplement) 10

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 11
That the Laws of Maryland read as follows: 12

Article – State Finance and Procurement 13

2–901. 14

(a) In this section, “State contract” means any agreement entered into by the 15
State. 16

(a–1) This section does not apply to: 17
2 HOUSE BILL 300

(1) a State contract relating to the purchase, redevelopment, or operation 1
of a racing facility or training facility site as those terms are defined under § 10–601 of the 2
Economic Development Article; OR 3

(2) A STATE CONTRACT ENTERE D INTO BY THE OFFICE OF 4
INTERNATIONAL TRADE IN THE DEPARTMENT OF COMMERCE RELATING TO THE 5
DEVELOPMENT OF INTER NATIONAL BUSINESS AC TIVITIES AND OPPORTU NITIES 6
AUTHORIZED UNDER § 3–303 OF THE ECONOMIC DEVELOPMENT ARTICLE. 7

(b) Except as required by State or federal law, a State contract may not include: 8

(1) a provision that requires the State to indemnify, defend, or hold 9
harmless another person without an appropriation of State funds for that purpose; 10

(2) a provision by which the State agrees to binding arbitration or any 11
other binding extrajudicial dispute resolution process; 12

(3) a provision that names a jurisdiction or venue for any action or dispute 13
against the State other than a court of proper jurisdiction in the State; 14

(4) a provision that requires the State to agree to limit the liability for any 15
direct loss to the State for bodily injury, death, or damage to real property or tangible 16
personal property of the State caused by the negligence, intentional or willful misconduct, 17
fraudulent act, recklessness, or other tortious conduct of a person or a person’s employees 18
or agents or a provision that would otherwise impose an indemnification obligation on the 19
State; 20

(5) a provision that requires the State to be bound by a term or condition 21
that: 22

(i) is unknown to the State at the time of signing a contract; 23

(ii) may be unilaterally changed by the other party; or 24

(iii) is electronically accepted by a State employee without authority; 25

(6) a provision that provides for a person other than the Attorney General 26
of Maryland to serve as l egal counsel for the State, unless provided under § 6 –106 of the 27
State Government Article; 28

(7) a provision that is inconsistent with the State’s obligations under Title 29
3 or 4 of the General Provisions Article; 30

(8) a provision prohibited under § 7–237 of this article; 31

HOUSE BILL 300 3

(9) a provision for automatic renewal that obligates the State to allocate 1
funding in subsequent fiscal years; or 2

(10) a provision that limits the State’s ability to recover the difference in the 3
cost of a replacement contracto r to perform the services not performed by the original 4
contractor, to the extent that the sum of the amount paid to the replacement contractor and 5
the amount paid to the original contractor exceed the costs provided for in the contract with 6
the original contractor. 7

(c) If a State contract contains a provision listed under subsection (b) of this 8
section, the provision is void ab initio and the contract containing that provision shall be 9
enforceable as if it did not contain the provision. 10

(d) A State contract that contains a provision listed under subsection (b) of this 11
section shall be governed by and construed in accordance with State law, notwithstanding 12
any term or condition to the contrary in the contract. 13

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 14
1, 2026. 15

Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.