How Massachusetts contract interest works
Under G.L. c. 231, § 6C, when a court enters a judgment for money damages in a case based on a contract, the clerk adds interest to the damages:
- At the contract rate, if the contract establishes one.
- Otherwise at 12% a year.
- From the date of breach or demand, if that date can be established. If it can't, interest runs from the date the lawsuit was filed.
The interest is simple, not compounded. The rate is fixed by statute and doesn't move with market rates, which is why it's so much higher than what money earns in a bank today, and why debtors who wait it out usually end up paying more.
What the calculator does and doesn't do
It multiplies the amount you enter by 12% a year for the number of days between the two dates. It doesn't account for:
- A different interest rate in your contract, which would apply instead
- Partial payments, which reduce the balance on which interest runs
- Disputes over the date of breach or demand
- Post-judgment interest, which is calculated separately
- Claims against the Commonwealth, which use a different rate
Treat the result as an estimate. The actual figure depends on what the court finds.
Why the demand date matters
If a breach date isn't clear, a written demand for payment can establish when interest starts. Massachusetts courts have treated an invoice or bill that tells the debtor the amount and that payment is due as a demand. If you haven't sent a clear written demand on an overdue balance, it's worth doing now.
Tort claims
A companion statute, G.L. c. 231, § 6B, adds 12% interest to tort judgments as well, but from the date the lawsuit was filed rather than from breach or demand.
Want to know what your claim is worth with interest, fees and possible 93A damages? Send me the details.