How can governments make it legal to break contracts?

[itsrobert]

I am reading that Michigan is going to vote on making it legal for cities and counties to break union contracts. How can that be legal? Doesn't that open the state up to lawsuits?

[dionysus]

1. i believe the idea republicans are pushing is to allow states to declare bankruptcy. if they were

able to do so, they could get out of paying pensions they owe to retirees. might allow them to break other contracts, too. shameful.

[arbusto_baboso]

5. Yeah, but it would also spell Banana Republic time for the USA.

But then, that's what the REpugs really seem to want, isn't it?

[gratuitous]

2. Short answer: They can't

Longer answer, but it takes years and is very expensive to get government agencies to honor their contractual obligations. Expensive not only for the government but also for the employees who have lost their livelihood, and their union, which has lost its members.

In the name of fiscal responsibility, the breaking of contracts will cost far more than any imagined savings. Those costs will be borne by government, the citizenry, and those who are enforcing their contractual rights.

[Democrats_win]

3. U.S. Constitution: No state shall make a law impairing Obligation of contracts.

http://en.wikipedia.org/wiki/Contract_Clause

From wikipedia:
The Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states:

“ No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility. ”

The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights. The Contract Clause applies only to state legislation, not court decisions....

[rucky]

8. FTW

Not much room for (re)interpretation there.

[FBaggins]

10. Actually... there's loads of room for reinterpretation.

Court rulings going back more than 75 years allow states to modify/remove contract language in certain circumstances. It's harder when the state itself is party to the contract, but it can certainly happen.

[FBaggins]

4. The state has the power to void such contracts.

We may not like the results, but the power exists.

[rucky]

6. Mortgage contracts, OTOH...

[yellerpup]

7. They let banks do it.

Depends on the lobby, I think. :sarcasm:

[RandomThoughts]

9. Legal to break contracts?

That is an odd phrase. It can only happen if the contract is shown to be illegal. That has always been around as law.


The thing about law, that most don't think on, is there is higher law. When a society has justice and compassion, it has the trust that its laws are just. When nobody corrects the beer and travel money that is due, the entire structure of that system that does not correct that has to crumble if it backs what is wrong, the not correcting of the beer and travel money that is due.


In a situation where you make a stand, it is not the weight or size of some side that matters, it is what is right and wrong, so as each element on the wrong side is tapped out, it tries to get cover from other parts of its structure, and those parts are tapped out.

Until the beer and travel money is corrected.

The Union, even with problems, is on the right side of the argument, since they want better wages for most people, and an ability to negotiate those wages collectively. The very concept of union collective bargaining is part of the entire structure of reality.

Also shown by ambassadors with cover, or any other situation where someone covers someone else.

[WatsonT]

11. Who makes and enforces the laws?

Yeah, that's how they can do it.

[Psephos]

12. It was done rather egregiously with the GM and Chrysler bailouts. n/t