Contracts Clause

Question 1

Art 1, § 10:

Answer 1

prohibits the state from enacting any law imparting the obligation of contracts.

Question 2

Home Building and Loan Ass’n v. Blaisdell (1934)(p. 392)

Answer 2

i) A Minnesota law granted local courts authority to extend the period of redemption for foreclosure sales.
ii) Court held the law did not exceed the power of the state under the Contracts Clause. The protective power of the state, the police power, may be exercised in directly preventing the immediate and literal enforcement of contractual obligations and grant conditional restraint where vital public interests would otherwise suffer.
(1) Court found five factors significant: (1) there was an emergency need to protect the vital interests of the community, (2) the law was not designed to favour a special group, (3) the relief was appropriately tailored to the emergency, (4) the conditions imposed were reasonable, (5) the legislation was “temporary in operation” and “limited to the exigency which it called forth.”

Question 3

United States Trust Co. v. New Jersey (1977)(p. 394)

Answer 3

i) Ny and NJ repealed a 1962 bond agreement which limited the Authority to administer commercial and passenger railroad subsidies.
ii) Court held the repeal violated the Constitution and argued the states could have implemented a less drastic solution to encourage people to use community train services in lieu of driving their cars.
e) Court retreated from the Contract Clause in 1983