Freedom of The clauses of the State bills of rights, which prohibit the impair ment or deprivation of life, liberty or property without due process of law, serve as a protection to the right to make contracts respecting per sonal services or property; with reference to the exercise of Federal power this right is protected by the Fifth Amendment to the Constitution; while, as regards action by the States, Amend ment XIV provides that <'no State shall make or enforce any law which shall abridge the privi leges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty or property, without due process of law? There are some limitations to the right to make contracts. The laws which define the competency of persons to make contracts de termine the validity of contracts so made; thus, infants, lunatics and married women (to a lim ited degree) are regarded as incapable of enter ing into a legal contract, and the obligations assumed under contracts made by such persons, even though made voluntarily, are void or rev ocable. Contracts opposed to public policy or violating valid legislative restrictions or prohi bitions cannot be enforced, nor do the constitu tional provisions extend protection to the obligations of such contracts. The valid exer cise of the police power of the State may necessitate the imposition of certain restrictions on private rights, but such restrictions on the freedom of contracts do not impair the con stitutional guaranties. Statutes may be passed in the public interest to regulate the sanitary conditions under which persons labor or to restrict the working hours of certain classes of laborers, such as women and children, and any contract made in violation of such prohibitions is invalid, since to this extent the State reserves the right to restrict the freedom of individuals to make contracts. By statutory provisions also the State may restrict the power of those in pub lic employment to limit their obligations in this respect.
Impairment of I, section X, paragraph 1 of the Constitution provided that no State ((shall pass any law impairing the obligation of contracts,° and most of the State constitutions contain a similar limitation. But there is a distinction between contractual obliga tions and those that are not contractual which may be determined by the ordinary legal rules defining the validity of contracts. The right to hold public office and the privilege of the elec tive franchise are not contractual obligations, and may be changed by subsequent legislation. Marriage and the inchoate rights of property existing in either party by virtue of marriage are subject to retrospective legislation. The constitutional prohibition applies not only to private contracts but to contracts made by a State or under its authority, wherefore no State by legislation may impair the obligations of its contracts. But the power to legislate on a subject may not be contracted away since one legislature may not bind a succeeding legislature with regard to matters coming within the scope of general legislative power, though in some cases a grant of certain rights or privileges may be deemed irrepealable. Thus, holders of bank notes issued under State authority or holders of State bonds which by statute have, been declared receivable in payment of public taxes are protected by constitutional provision against infringement of their rights through subsequent legislation which aims to modify or repeal the statute conferring such rights. The further
issue of such notes or bonds might be prohib ited, but those who have acquired them while the statute was in force are possessed of so called vested rights. Private individuals may not sue a State on its obligations. Charters granted to private corporations are contracts and, unless the right to alter, amend or repeal has been reserved to the State, the benefits accruing from such charters cannot be with drawn or impaired by subsequent legislation see DARTMOUTH COLLEGE CASE), though most tates have constitutional or statutory pro visions limiting the protection against subse quent legislation usually afforded to such char ters by their status as contractual obligations. The charters of public corporations may not be considered as contracts, and, being in the nature of legislation, are subject to modification or repeal at the legislative will, if no individual interests have been vested under them. Mc Clain says that, in general, subsequent remedial legislation changing the general law relating to procedure does not impair the obligation of contracts already made; but if a contracting party be deprived by statute of any substantial relief for breach of contract by the other party, then such statute constitutes an impairment of the obligations of the contract and to that extent is prohibited. Hence, while the period of limi tation within which actions on contracts may be brought is subject to the legislative change, such change cannot be applied to existing con tracts if the parties thereto be deprived of a reasonable time within which to bring action for enforcing their rights under their contracts.
Bibliography.— Addison, C. G., (Treatise on the Law of Contracts' (8th ed., Boston 1888) ; Anson, Sir W. R., (Principles of the English Law of Contract' (7th ed., Oxford 1893) ; Ballantine, H. W., (Mutuality and Con sideration) (in Harvard Law Review, Vol. XXVIII, pp. 121-134, Cambridge, Mass., 1914) ; Cooley, T. M., (Treatise on Constitutional Lim itations) (7th ed., Boston 1903), and (Treatise on the Law of Torts) (3d ed., Chicago 1907) ; Demarest, T. F. C., (The Obligation of C,ontract in Its Relation to the United States Constitution) (in Albany Law Review, Vol. LXVII, pp. 315 329, Albany 1905) ; Egan, J. G., (Protection to Contracts by Due Process of Law) (in Ameri can Law Review,Vol. XXXVI, pp. 70-91, Saint Louis 1902) ; Freund, E., (Police Power' (Chi cago 1904); Helm, C. F., 'Treatment of the Fundamental Principles of the Law of Con tract) (New York 1914) ; Judson, F. H., (Lib erty of Contract under the Police Power' (in (American Bar Association Reports,) Vol. XIV, p. 231, 1891); McClain, Emlin, (Impairment of Contracts' (in McLaughlin and Hart, (Cyclo pedia of American Government,' Vol. I, pp. 456-459, New York 1914) ; McKeag, E. C., (Mistake in Contract) (New York 1905) ; Page, W. H., (Law of Contracts) (Cincinnati 1905) ; Parsons, T., (The Law of Contracts) (9th ed., Boston 1904); Trotter, W. F., (The Law of Contract during War) (London 1914) ; Wat kins, E., (When, under the Social Compact, Liberty of Contract May Be Limited) (in Sewanee Review, V ol. XVIII, pp. 466-482, New York 1910) ; Willoughby, W. W., (Constitutional Law of the United States) (New York 1910).