Freedom of contract

“ The whole doctrine of freedom of contract is based upon a theory of constitutional equality which is frequently belied by the facts. What saves the theory from being altogether a fiction, is the possibility of contracting on something like equal terms through the power of collective bargaining. The doctrine of freedom of contract stands and falls with the efficacy of the organization of labor. ”

“ The illusion contained in the words "freedom of contract" is well demonstrated in the history of the trade union, for if the employee is to be free to make such contracts as he chooses, he is not only free as regards the contracts he chooses to make with his employer, but also as regards the contracts he chooses to make with his fellow employee. And amongst the contracts that he is free to make with his fellow employee is the contract not to work for his employer except under certain agreed conditions. ”

“ But, as trade developed, it came to be understood that, if contracts which only partially restrained the freedom of the subject or of trade were embraced in the rule forbidding contracts in restraint of trade, both the freedom of contract and trade itself would be destroyed. Hence, from the reason of things, arose the distinction that, where contracts operated only a partial restraint of the freedom of contract or of trade, they were not, in contemplation of law, contracts in restraint of trade. ”

“ Direct interference by the state in the freedom of contract is justified as leading to a more real and certain equality and liberty. But while we may thoroughly approve the principle of labor legislation it is difficult to know at what point we should stop. ”

“ The former saw in contract a realization of the idea of liberty. The latter saw in it a means of promoting that maximum of individual free self-assertion which he took to be human happiness. Hence the former called for freedom of contract and should have called for wide general enforcement of promises. The latter held to a doctrine of unshackling men and allow [Pg 268] ing them to act as freely as possible, which involved the complementary position of extending the sphere and enforcing the obligation of contract. ”

“ Such interferences with freedom of contract as these are, of course, only justifiable when the absence of effective competition places the real power of settlement of terms practically in the hands of one side alone, and conduces, therefore, inevitably to the serious injury and oppression of the other. ”

“ There must, indeed, be a certain freedom of contract, and, as there cannot be a precise, verbal expression of the limitations of it, arguments against any particular limitation may have plausible strength, and yet many legal restrictions have been and must be put upon such freedom in adapting human laws to human conduct and necessities. ”

“ As the liberty of contract guaranteed by the Constitution is freedom from arbitrary restraint,-not immunity from reasonable regulation to safeguard the public interest,-the question is whether the restrictions of the statute have reasonable relation to a proper purpose. ”

“ The sophistry of such evasion will be apparent if the question of ‘consent’ and the specious hypocrisy generally involved in freedom of contract be closely examined. Freedom of contract can only take place between those who in certain essential particulars are equals. The parties to any contract must be so far equals in intelligence, that they can equally understand any risks that may be run, and clearly foresee the probable results of the bargain ”

“ It is no limitation upon property rights or freedom of contract to require that when men receive from Government the privilege of doing business under corporate form, which frees them from individual responsibility, and enables them to call into their enterprises the capital of the public, they shall do so upon absolutely truthful representations as to the value of the property in which the capital is to be invested. Corporations engaged in interstate commerce should be regulated if they are found to exercise a license working to the public injury. ”

“ Since the disputes in question rarely if ever arise out of a breach of contract on the part of the employer-owner, the decision can ordinarily, in the nature of the case, not go against him, inasmuch as the foundation of economic law and order is the freedom and inviolability of pecuniary contracts. ”

“ We have had frequent occasion to consider the limitations of liberty of contract. While it is highly important to preserve that liberty from arbitrary and capricious interference, it is also necessary to prevent its abuse, as otherwise it could be used to override all public interests and thus in the end destroy the very freedom o opportunity which it is designed to safeguard.
We have repeatedly said that liberty of contract is a qualfied and not an absolute right. 'There is no absolute freedom to do as one wills or to contract as one chooses. ”

“ So far as the hitherto recognized principle of fair dealing between an assignor and his assignee unduly restrains the freedom of action of the assignor, it merely restrains in the manner that every contract is a restraint of trade. ”

“ What is this 'obligation of contracts,' which is prohibited from being impaired by any act of State legislation? We answer, it is the civil obligation, the binding efficacy, the coercive power, the legal duty of performing the contract. The constitution meant to preserve the inviolability of contracts, as secured by those eternal principles of equity and justice which run throughout every civilized code, which form a part of the law of nature and nations, and by which human society, in all countries and all ages, has been regulated and upheld. ”

“ Government is instituted for their equal protection and benefit.' It then said: 'The usual and most frequent means of acquiring propety is by contract, and one of the most valuable and sacred rights is the right to make and enforce contracts. ”

“ He has shown that the right to contract is not conferred by society, but is a natural original right, brought by each individual into society; and that the obligation of contracts is not the result of positive law, but is intrinsic, and is conferred by the act of the parties. ”

“ In the view of these higher adepts of the law, free contract is so inalienable a natural right of man that not even a statutory enactment will enable a workman to forego its exercise and its responsibility. ”

“ When one enters into interstate commerce, one enters into a service in which the public has an interest, and subjects one's self to its behesta. And this is no limitation of liberty; it is the consequence subjects one's self to its behests. And this his undertaking, and constrains no more than any contract constrains. The obligation of a contract is the law under which it is made, and submission to regulation is the condition which attaches to one who enters into or accepts employment in a business in which the public has an interest. ”

“ But if, by forbidding a contract to be made, a State law can prevent the contract's having any obligation, State laws, by forbidding any contracts at all to be made, can prevent all contracts, thereafter made, from having any obligation; and thus utterly destroy all men's natural rights to make any obligatory contracts at all. ”

“ As business boomed throughout our growing country giving more States than one an interest in what a contract meant and how it should be enforced for the benefit of the citizens who made it or for whose benefit it was made, practical men began to see that there could not be one single rule of law to govern a contract in which the citizens of many States were interested. ”

“ Can this performance of a legal duty, a duty both to stockholders of the company and to the public, give to plaintiffs a right of action? Can they found such a right on an agreement void for want of corporate authority and forbidden by the policy of the law? To hold that they can, is, in our opinion, to hold that any act performed in executing a void contract makes all its parts valid, and that the more that is done under a contract forbidden by law, the stronger is the claim to its enforcement by the courts. ”

“ The government, purely as contractor, in the absence of special laws, may stand like a private person; but, by making a contract, it does not give up its power to make a law, and it may make a law like the present for the reasons that we have stated. We are of opinion that the act is not contrary to the Constitution of the United States. ”

“ Should one or more of those contracting parties, sovereignties in themselves, hold it to their interest to transact their business without the assistance of an agent, I cannot perceive that the right can be denied by any provision of the contract. ”

“ If one with a perfect knowledge of the facts will part with his money, or bind himself by his contract in a sufficient consideration, any rule of law which would restore him his money or absolve him from his contract would subvert the rules of social order. ”

“ While we have never hesitated to vindicate the right of individuals or corporations to enforce the performance of lawful contracts as against subsequent legislation designed to impair them, we have always exacted as a condition that the contract was one which the legislature, or opposite party, had power to make under the Constitution, and that the other party was chargeable with knowledge of all its provisions in that connection. ”

“ The warmest advocate for state power will find it difficult to discover any principle from which it can be implied, that one party to a contract reserves to himself the power of destroying all the rights conferred by the contract. ”

“ We should see oppression continually gain ground without it being possible for the oppressed to know where it would stop, or what legitimate means was left them of checking its progress. We should see the rights of citizens, and the freedom of nations slowly extinguished, and the complaints, protests and appeals of the weak treated as seditious murmurings. We should see the honour of defending the common cause confined by statecraft to a mercenary part of the people. ”

“ As a contract, every article of it should be inviolable; as the common basis of the strength and happiness of two nations, every article of it should be sacred. I hope I can not be suspected of conceiving a thought so detestable as to propose an advantage to one of the contracting parties at the expense of the other. ”

“ In so far as the individual is limited by the law, he is a subject, subject to the protective power within its limited sphere. Again: The agreement was entered into with him only on condition of his furnishing his contribution, and hence the contract is canceled when he does not furnish it. Each one, therefore, guarantees with all his property that he will so contribute, and he loses his right to his property if he does not contribute. ”

“ When we speak of a compact in a legal sense, we naturally include in it the notion of distinct contracting parties, having mutual rights, and remedies to enforce the obligations arising therefrom. We suppose, that each party has an equal and independent capacity to enter into the contract, and has an equal right to judge of its terms, to enforce its obligations, and to insist upon redress for any violation of them. ”

“ I consider it also well settled, that a contract with a state stands on ground in no respect differing from all other contracts; and the constitution of the United States has, in its provisions, no reference specially to such contracts. The state is bound by no higher obligation to abstain from violating its own contracts by law, than to abstain from violating all other contracts. All citizens stand on the same footing in this respect, with the same measure of redress, and the same extent of rights. ”

“ Does the contract, called a bill of exchange, stand on any different footing? It is true, that when once made, by a person having authority to make it, in any given case, it is not open to the same inquiries, in the hands of a third party, that ordinary contracts are, as to the justice, fairness, and good faith which attended its origin, or any of its subsequent transfers; but, in reference to the authority of the officer who makes it, to bind the government, it is to be judged by the same rule as other contracts. ”

“ Nowhere is the confusion between legal and moral ideas more manifest than in the law of contract. Among other things, here again the so-called primary rights and duties are invested with a mystic significance beyond what can be assigned and explained. The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it—and nothing else. If you commit a tort, you are liable to pay a compensatory sum. If you commit a contract, you are liable to pay a compensatory sum unless the promised event comes to pass, and that is all the difference. ”

“ A principle of common justice forbids that one shall be permitted to lead another to act upon a contract of purchase with him, and incur expenses by reason of it, and then, upon some pretext of a defect in a matter of form, refuse compliance with its provisions, and thus deprive the purchaser of the benefit of his labor and expenditures. ”

“ If this reasoning were adopted, there would be an equal repugnancy in the terms of the contract, whether the nature of the risk were written in the policy or fixed by previous description. But, subject to possible exceptions of this kind, it would seem that a contract would be made, and that the most that could be claimed would be a right to rescind. Where parties having power to bind themselves do acts and use words which are fit to create an obligation, I take it that an obligation arises. ”

“ A law which authorizes the discharge of a contract by a smaller sum, or at a different time, or in a different manner, than the parties have stipulated, impairs its obligation, by substituting, for the contract of the parties, one which they never entered into, and to the performance of which, of course, they never had consented. ”