Like Article I, Section 9
, this section deals with limitations. Here, the Constitution places limits on the laws a state may pass. In these three clauses, the Constitution prohibits a number of seemingly unrelated things. However, they are all theoretically linked by the notion that, with the ratification of the Constitution, states gave up a portion of their sovereignty. States are not countries. Therefore, they may not legislate like they are countries.
In the first clause, among other prohibitions, states are forbidden from making treaties, creating money, and holding people accountable for crimes committed before those acts were made crimes. However, the provision in this clause that has been the source of the most study is the segment that prohibits a state from making a “Law impairing the Obligation of Contracts.” In fact, this entire clause has been known as the “Contract Clause” because of the importance of that provision. Simply, it prohibits states from making laws that interfere with contracts that have already been created. In the early years of the country, this provision was considered sacrosanct. For example, in Fletcher v. Peck
(1810), the Georgia legislature sought to void land contracts that it had made in a previous session after learning that the original contracts were issued in exchange for bribes. However, the Supreme Court held this action unconstitutional. Once a contract is made, the Contract Clause prohibits interference by the government. However, the clause has since been watered down in the modern era. In Home Building & Loan Association v. Blaisdell
(1934), the Court examined a Minnesota law that prohibited banks from foreclosing on homeowners in default. Conceptually, this was an interference with a contract – the exact type of law that the unqualified Contract Clause appears to prohibit. However, the Court considered this an insubstantial enough interference for a significant enough purpose (this was during the Great Depression, after all) and did not hold the law unconstitutional. Thus, today, the Court generally holds that a state may interfere with a contract given sufficient justification. It is no longer and black and white issue.
The second clause further prohibits another marker of independent nations, placing tariffs on imports and exports. In the third clause, states are prohibited from creating an army and making alliances or wars.
Indeed, as Congress was imbued with authority, the power of state legislatures diminished. They were no longer quasi-countries loosely bound by the Articles of Confederation. They were the new United States of America.
Fletcher v. Peck
Home Building & Loan Association v. Blaisdell