united-states contract-law constitutional-law us-constitution
What is the meaning of the Contracts Clause?
<p>The contracts clause establishes that no state may make any law &quot;impairing the Obligation of Contracts.&quot; I am curious about the use of language here. In particular, the use of the verb form <em>&quot;impairing&quot;</em> instead of <em>&quot;to impair&quot;</em> or <em>&quot;that impairs&quot;</em> makes the meaning of the law a bit unclear. For example, if one says that &quot;you cannot say something <em>offending</em> someone,&quot; they are saying &quot;you cannot say something <em>that offends</em> someone&quot; and not &quot;you cannot say something <em>to offend</em> someone.&quot; It seems like the Contracts Clause has been understood as meaning both &quot;to inhibit&quot; and &quot;that inhibits.&quot; The precursor to the Contracts Clause found in the Northwest Ordinance prevented the government from <em>direct</em> interference with contracts. It seems like the framers intended for this to be the purpose of the Contracts Clause. However, the language of the clause and supreme court precedent appears to say otherwise. For instance, in <em>Energy Reserves Group v. Kansas P. &amp; L. Co.</em>, 459 U.S. 400 (1983), the court stated that &quot;The threshold inquiry is 'whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.'&quot; This suggests that the Contracts Clause is capable of invalidating laws that indirectly inhibit contractual obligations.</p>
<p>How should one reconcile these conflicting understandings?</p>

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<p>How should one reconcile these conflicting understandings?</p>
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<p>A holding of the U.S. Supreme Court that it has not later abandoned is, by definition, the correct interpretation of the U.S. Constitution for all purposes of U.S. law, even if a plain reading of the constitutional language might suggest otherwise.</p>
