Contract Clause

Question 1

CONTRACT CLAUSE—IMPAIRMENT OF CONTRACT

Answer 1

The Contract Clause limits the ability of state and local governments to enact laws that retroactively impair contract rights. It doesn’t affect contracts not yet made.

Question 2

Private Contracts—Intermediate Scrutiny

Answer 2

Legislation that substantially impairs an existing private contract is invalid unless the legislation:
* Serves an important and legitimate public interest, and
* Is a reasonable and narrowly tailored means of promoting that interest

Question 3

Public Contracts—Heightened Scrutiny

Answer 3

Legislation that impairs a contract to which the state is a party is tested by the same basic test, but the legislation will likely receive heightened scrutiny, especially if the legislation reduces the contractual
burdens on the state.