What does the contract clause in the Constitution prohibit?

The contract clause, found in Article I, Section 10 of the U.S. Constitution, explicitly prohibits states from passing laws that interfere with existing contracts. This clause was established to ensure that contractual agreements are honored and upheld, promoting economic stability and trust in business dealings. By preventing states from enacting laws that would alter the terms of contracts or undermine their enforceability, the Constitution protects the rights of individuals and businesses, fostering a reliable legal framework for commerce.

This principle reflects the Founders' intent to maintain a predictable business environment, which is essential for economic growth. Such protections help prevent individual states from enacting laws that could disrupt or invalidate previously agreed-upon terms by the parties involved.