Posted on 03/13/2018 10:25:57 AM PDT by reaganaut1
In the first century or so of our national existence, one of the Constitution’s provisions that was most often at issue was the Contract Clause. But following New Deal era decisions that eviscerated it, hardly any cases have since centered on it. The clause has been so forgotten that few Americans even know it’s there, in Article I, Section 10, reading, “No state shall pass any law impairing the obligation of contracts.”
The Constitution’s drafters had good reason to include that language, meant to assure people that contracts would be inviolate. During the years under the Articles of Confederation, the states frequently undermined the confidence in contracts by enacting debt relief laws and revoking business charters. The first state law to be declared invalid by a federal court was a Rhode Island statute that let a politically connected state businessman out of his debts. Unless contracts were reliable, the Founders knew, the new nation’s commercial development would itself be impaired.
American courts took the Contract Clause very seriously until the New Deal. Professor James W. Ely’s recent book The Contract Clause: A Constitutional History (which I reviewed here) recounts the way the Marshall Court esteemed the clause and how it held up quite well (although with some erosion) during the “Progressive” era.
Then came the Great Depression.
Just as the Court turned its back on other cornerstones of limited government and the rule of law during that era, so did it jettison the once-formidable Contract Clause. In a 1934 decision, Home Building & Loan Association v. Blaisdell, Chief Justice Hughes decided that during the “emergency” of the Depression, the Court had to allow legislatures to impose a moratorium on mortgage foreclosures.
(Excerpt) Read more at forbes.com ...
Not the authority, surely. Unfortunately, they seem to posses the power.
Not to mention the 99 billion year contract of Fictionology.
“I don’t see contracts being nullified outside the bankruptcy process, which is as it should be.”
That would be an illegal contract to begin with.
Never heard of such. But sounds wrong to me.
Or how about when a court decides that companies whose employment contracts limited health benefits to spouse and children must now extend those to homosexual partners?
I don’t recall ever signing an employment contract that stipulated insurance conditions, but I’ve been retired for some time, now, so I can’t say what is current.
Anyway, what I was clumsily trying to say is that widespread breach of contract doesn’t appear to be a phenom, while the biggest debt bubble in the country seems to be govt and civilian unions retirement obligations that heve no way of ever being fulfilled. If the state can’t get out from under those, you’ll all be slaves to the unions.
“That would be an illegal contract to begin with.”
What’s the practical difference between the state deciding to void one specific contract, or the state deciding that a whole class of contracts are “illegal”?
“If the state can’t get out from under those, you’ll all be slaves to the unions.”
Well, the states may go bankrupt, but thankfully, citizens are free to exit the state and let the state worry about those ill-considered contract obligations.
It’s the ‘clean hands,’ thing. Courts won’t enforce contracts where a party is doing something criminal, like paying less then the minimum wage. Though it makes you wonder how ‘interns’ can get nothing but the experience.
Even in the Founders' day, there was a well-recognized rule that certain contracts were void as illegal. The difference is that if the rule that made the contract illegal was written in the law before the parties entered into the contract, it did not upset anyone's legitimate expectations; what the contracts clause of the Constitution prohibited was making a contract, which was legal when entered into, retroactively unenforceable.
what the contracts clause of the Constitution prohibited was making a contract, which was legal when entered into, retroactively unenforceable.
When the 401K bubble bursts, it will be worse.
Is it your contention that the framers were cool with paper money?
Hint: Not a fv&$ing chance. They had just went through a period of ruinous hyperinflation due to printed money and knew exactly the problems and temptations involved.
All I know is that they listed making paper money legal tender among the list of things that states were not permitted to do, and did not explicitly ban Congress from doing it.
You didn’t answer the question.
There is no question that congress was empowered to regulate the value thereof.
What we are talking about here is the unit of account. Contracts were written that specified payment in terms of gold coin. When said contract is 99 year lease that makes a certain amount of sense doesn’t it?
Here in Ioway it was an interesting case. The leaseholder was getting a sweetheart deal, because once the federal government reneged on gold bonds, forbade the payment of gold clause contracts they were able to rent a downtown skyscraper (such as it was, it’s Des Moines, work with me here) for a couple thousand dollars a month.
See how that works? Paper money becomes increasingly worth less over time, eventually becoming worthless. The building owner was able to demand payment in gold (or value of); it was complicated but the courts ruled that gold clause contracts are once again enforceable.
Still, how can a contract mean anything when the fundamental unit of account isn’t defined? An acre of land doesn’t get smaller over time. A gallon of milk doesn’t change. We don’t hear on the radio news broadcasts that “The yard lost several inches against the meter in heavy overnight measuring overseas.”
But with money, all of sudden, they act like it’s some kind of g@$%#amn mystery, and unknowable. BS. Don’t be fooled.
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