ArtI.S10.C1.6.4 Impair Defined

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.

The obligations of a contract, said Chief Justice Hughes for the Court in Home Building & Loan Ass'n v. Blaisdell, 1 are impaired by a law which renders them invalid, or releases or extinguishes them . . . , and impairment . . . has been predicated upon laws which without destroying contracts derogate from substantial contractual rights.2 But he adds: Not only are existing laws read into contracts in order to fix obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile, – a government which retains adequate authority to secure the peace and good order of society. This principle of harmonizing the constitutional prohibition with the necessary residuum of state power has had progressive recognition in the decisions of this Court.3 In short, the law from which the obligation stems must be understood to include constitutional law and, moreover a progressive constitutional law. 4

Footnotes

  1.  Jump to essay-1290 U.S. 398 (1934).
  2.  Jump to essay-2290 U.S. at 431.
  3.  Jump to essay-3290 U.S. at 435. See also City of El Paso v. Simmons, 379 U.S. 497 (1965).
  4.  Jump to essay-4The Blaisdell decision represented a realistic appreciation of the fact that ours is an evolving society and that the general words of the contract clause were not intended to reduce the legislative branch of government to helpless impotency. Justice Black, in Wood v. Lovett, 313 U.S. 362, 383 (1941).