The Contract Clause (U.S. Constitution)

The Contract Clause is found in Article I, Section 10 of the U.S. Constitution. It prohibits states from passing laws that retroactively impair contract rights. This means states cannot interfere with existing contracts, ensuring that agreements made between parties are honored. The intent is to promote economic stability and trust by protecting the validity of contracts. Essentially, if two parties enter into a contract, the state cannot later change the rules to disadvantage one party or invalidate the agreement. This clause is crucial for maintaining fair business practices and upholding private agreements in the U.S. legal system.