Also known as: obligations of contracts · contract obligation · contract obligations · contracts clause · impairment of contracts
Written by attorneys · grounded in primary & secondary sources — see below
An enforceable duty or right arising from a valid contract. The Contracts Clause protects such duties and rights from substantial impairment by subsequent state legislation.
Betting operators had signed multi-year sponsorship agreements with state universities. Tennessee then enacted a statute that named the operators and canceled those existing contracts outright. The operators sued, claiming the statute impaired their contractual rights to perform and receive payment under the agreements.
A tribe sued Florida in federal court to enforce a gaming compact the state had signed. Florida argued sovereign immunity barred the suit. The tribe responded that the compact created enforceable contractual obligations the state could not evade through immunity claims.
Passengers sued a railroad in state court for breach of a settlement agreement. The railroad removed the case to federal court, asserting that the state court's interpretation of the agreement would impair its contractual obligations under federal law.
Select any source to read its text and confirm it supports the definition.
Same-sex couples who had entered civil unions in one state later sought recognition of their relationships as marriages in another state. The second state argued its marriage laws did not impair any contractual obligations created by the earlier civil unions.
A steel company maintained a pension plan for employees under collective bargaining agreements. Minnesota enacted a law requiring the company to fund additional pension obligations when it closed a plant. The company sued, alleging the statute substantially impaired its existing contractual pension duties.
Homeowners had signed mortgages requiring monthly payments and foreclosure upon default. Minnesota passed a law extending redemption periods and delaying foreclosures during an economic emergency. Lenders challenged the statute as impairing the contractual obligations in the original mortgage agreements.
The clause protects the enforceable duties and rights created by valid contracts from substantial impairment by later state legislation.
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No. The clause restricts only state action and does not limit Congress.
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A state law impairs contractual obligations when it substantially alters the parties' rights or duties under an existing agreement without sufficient justification.
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No. It bars only substantial impairments by state legislation. Reasonable, narrowly tailored adjustments serving important public purposes may survive review.
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…adopted by the People themselves when they ratified the Constitution and its Amendments. Forbidden are laws “impairing the Obligation of Contracts,” denying “Full Faith and Credit” to the “public Acts” of other States, prohibiting the free exercise of religion, abridging the freedom of speech, infringing the right to keep and bear…