MBE Rules · Constitutional Law
Contract Clause
Art. I §10 cl. 1
The rule
No STATE shall pass any law impairing the obligation of contracts. For private contracts, substantial impairment survives if it (1) serves a significant and legitimate public purpose and (2) is reasonably and appropriately tailored to that purpose. Impairments of the state's own contracts receive heightened scrutiny.
In plain English
Applies only to states (not the federal government — use due process for federal contract impairments) and only to retroactive interference with existing contracts. Prospective contract regulation is fine.
The trap
Applying it to federal legislation, or to prospective regulation. Also — public (state-party) contracts get stricter review than purely private ones.
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