CONSTITUTIONAL LAW
W.B. Fisch, Fall 2006
Assignment #23

B. The Contract Clause: What Does It Add to the Due Process Limitation?

"No State shall ... pass ... any Law impairing the Obligation of Contract..."

  • What is the purpose of this provision?
    • "promote confidence in stability of contractual obligations" (U.S. Trust)
    • debtor-relief laws rampant in pre-Constitutional state legislatures
  • What limitations are implicit in the language?
    • states: does the clause apply to the federal government?
    • pass any law: what about a judicial change in the common law?
    • impair obligation: does it apply to laws affecting future contracts?
  • UNITED STATES TRUST CO. V. NEW JERSEY, p. 536 (1978)
    • does the clause apply to impairments of contracts between state and private persons? Fletcher v. Peck (1810), Dartmouth College Case (1819)
    • does the contract involve a commitment which the state has the power to make?
      • restricting future regulation? Stone v. Mississippi (1880); Slaughterhouse Cases II (1884)
      • financial commitment?
    • what standard of review applies to laws impairing obligation of public contracts?
      • is the state's purpose important, or at least of legitimate public interest?
      • is the impairment necessary?  What alternative means were available to achieve the state’s purpose?
      • is the impairment reasonable?
  • ALLIED STRUCTURAL STEEL CO. V. SPANNAUS, p. 543 (1978)
    • what is the impairment here, and how severe is it?
    • what standard of review does the Court apply? Is it different from that in U.S. Trust?
      • broad, generalized economic or social problem
      • area already subject to state regulation
      • temporary alteration of contractual relationships
    • is there an emergency here, as in Blaisdell?
    • what alternatives did the State have?
  • Energy Reserves Group, Inc. v. Kansas Power & Light Co., p. 549 (1983)
    • What impairment is involved here? Is it "severe"? "Substantial"?
    • what standard of review is applicable?
  • Exxon Corp. v. Eagerton, p. 551 (1983)
    • are there impairments of existing contract obligations?
    • is the primary effect of the law prospective?
    • If so, does the K-Clause apply?