ArtI.S10.C1.6.1 Overview of Contract Clause
Article I, Section 10, Clause 1:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money;
emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder,
ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
In addition to prohibiting states from enacting bills of attainder and ex post facto laws, the Constitution seeks to
protect private rights from state interference by limiting the states’ power to enact legislation that alters existing
contract rights. The Constitution’s Contract Clause provides: “No State shall . . . pass any . . . Law impairing the
Obligation of Contracts.” Although this language could be read as completely prohibiting a state’s legislative impairment
of contracts, the Supreme Court has interpreted the clause to limit a state’s power to enact legislation that:
(1) breaches or modifies its own contracts; or (2) regulates contracts between private parties.
The Supreme Court has held that the Contract Clause does not generally prevent states from enacting laws to protect the
welfare of their citizens. Thus, states retain some authority to enact laws with retroactive effect that alter contractual
or other legal relations among individuals and entities. However, a state’s regulation of contracts, whether involving
public or private parties, must generally be reasonably designed and appropriately tailored to achieve a legitimate public
purpose.
Prior to the ratification of the Fourteenth Amendment and the subsequent development of the Supreme Court’s Due Process
jurisprudence, the Contract Clause was one of the few constitutional clauses that expressly limited the power of the states.
During the New Deal Era, in Home Building & Loan Ass’n v. Blaisdell, the Supreme Court upheld a Minnesota mortgage
moratorium, signaling that it would allow states greater latitude under their police powers when the public welfare was at
stake.
