Restricting the freedom of contract: a fundamental prohibition.
[T]he movement of the progressive societies has hitherto been a movement from Status to Contract. (1)
--Sir Henry Maine
The first principle of a civilized state is that power is legitimate only when it is under contract. (2)
[F]reedom of contract is a qualified, and not an absolute, right. (3)
--Chief Justice Charles Hughes
The right to contract is one of those fundamental rights in our society that is frequently lauded and rightly receives primary credit for the establishment of a functional, market-based economy in which predictability is prized. (4) This right is so ingrained that whenever we do hear about infringement of the right to contract, it is usually historical, such as limitations on women's right to contract prior to the nineteenth and twentieth centuries (5) or the rights of slaves or indentured servants preceding the twentieth century. (6) In addition, the supremacy of contract in our society has evolved from solely a mercantile instrument to one that encompasses transactions that are either not commercial or only tangentially so. Common examples include child custody agreements which are essentially court-affirmed contracts, surrogacy agreements, cohabitation agreements (prenuptials without the nuptials), divorce settlements, etc. (7) Given the prevalence of contract in modern society, it is difficult to imagine how anyone could live without that right. (8)
This article focuses on the larger question of the role states should play in determining the right of persons to contract and whether federal limitations should operate to curtail state action in this arena. While in some contexts states have successfully limited the right to contract based on status, (9) or capacity, (10) those limitations are an exception to the general rule of the freedom of contract. This is especially true in cases of status, whereby a state could declare a contract invalid because of who was entering into the contract, rather than for what purpose the contract was executed.
Alabama's Hammon-Beason Alabama Taxpayer and Citizen Protection Act, HB 56, provides that a contract is void based on the immigration status of one of the parties. (11) This article focuses on only two sections of the law (12) which strike at the heart of the viability of an individual's existence in a modern society by eliminating his right to contract. (13) Even without discussing work authorization or the ability to obtain employment, eliminating the basic right to contract would likely have rapid, severe consequences as individuals find their ability to contract for necessities nonexistent. Under the Hammon-Beason Act, housing agreements (in excess of one night), transportation agreements, airfare or vehicle purchase agreements (other than a contract to return the immigrant to his country of origin), service agreements, purchase agreements, etc. would all be subject to nullification. (14)
This article argues that the general right to contract, that is to say the ability of one to obligate himself in exchange for another's obligation in return, is a fundamental (or basic) though not all-encompassing right and one that is subject to additional legal protections especially when limitations are sought to be imposed based on status rather than capacity or subject matter of the contract. (15) The more difficult question then becomes the determination of legitimate versus illegitimate restrictions on the right to contract when the restrictions are based on status. This article concludes that restrictions on the right to contract based solely on status should generally not be upheld, on multiple legal grounds.
Applying the foregoing analysis in the context of the Hammon-Beason Act, this article argues that a prohibition on the right to contract based solely on unauthorized immigration status in the United States likely violates the Civil Rights Act and the U.S. Constitution on preemption, due process and equal protection grounds, and, as originally conceived, on Contract Clause grounds as well. In addition, giving judicial imprimatur to a legal framework which would eliminate a fundamental right of a vulnerable class of individuals would further harm and destabilize that group and exacerbate underlying racial tensions which are not dissimilar to those experienced during the civil rights struggle, which eventually culminated in the Civil Rights Era of the 1960s.
II. CONTRACT AS A FUNDAMENTAL RIGHT
Throughout this article I will refer to status versus capacity. Status, as defined by Black's Law Dictionary, has a variety of meanings which can include a person's legal condition, (16) a person's capacity and incapacity, (17) or "a person's legal condition ... imposed by the law without the person's consent, as opposed to a condition that the person has acquired by agreement." (18) It is this last definition of status that this paper focuses on. Perhaps tellingly, the example provided by Black's for that definition is "the status of a slave." (19) In prior generations, individuals prevented from contract on the basis of status alone have been so treated due to race, gender, religion, national origin, etc. (20) It seems unlikely that it is mere coincidence that many of those denied the right to contract are the same groups that largely comprise our suspect classes under the law of equal protection. In fact, status is now generally only used
... in English Law, in connection ... with those comparatively few classes of persons in the community who, by reason of their conspicuous differences from normal persons, and the fact that by no decision of their own can they get rid of these differences, require separate consideration in an account of the law. (21)
In contrast, when this Article mentions capacity, it uses the term applying its standard meaning. Capacity is, generally stated, the legal ability of an individual to enter into a binding agreement. (22) Under current law, contractual incapacity generally focuses on the age of the contracting party (whether the party is a minor), (23) or potential impairment of one's mental capacity to contract. (24)
In both instances the right to contract has in the past been lawfully restricted depending on the identity of the individual as a member of a class or specific qualities of the individual. Those restrictions would seem to imply that the right to contract may not be as fundamental a right as is here suggested. Nevertheless, even if it is not deemed a fundamental right, the right to contract should be subject to additional constitutional or statutory protections because of the discriminatory and arbitrary consequences restrictions on that right impose on unauthorized immigrants. This Article agrees that freedom of contract is subject to some limitation; however, the general right of an individual to contractually obligate himself and receive corresponding obligations in return is so pervasive and necessary for our society as to make it a fundamental right, and as such, to be entitled to a significantly higher level of protection.
A. Freedom of Contract as "Fundamental"
Most people never consider the importance of the right to contract, which is essentially the ability to gain and dispose of possessions and services, alter legal relationships, and act with some guaranty as to future obligations and rights. (25) It is not until one is faced with the prospect of not having that right that its value becomes more readily apparent. To be sure, this article is not arguing for a return to Lochnerian jurisprudence based on a laissez faire approach to the market in which wage and hour laws, child labor laws, and the like were invalidated as impositions on the "freedom of contract." (26) Rather, the freedom to contract argued for is the basic right of an individual to enter into agreements that gain or dispose of possessions, services or otherwise alter legal relationships. As Justice Thompson noted in 1827, the obligation of contract "springs from a higher source: from those great principles of universal law, which are binding on societies of men as well as on individuals." (27)
The jurisprudential growth of the right of contract the past three centuries has steadily shifted the focus of common law rights from property to contract in areas as diverse as real property, personal property, labor, and legal status. (28) Coupled with that growth, governments have faced a continual tension, especially in the context of labor rights, between employers and the government with regard to worker protections and wage requirements. (29) In England, this tension resulted in many worker protection laws concerning hours, wages and actions (30) coexisting with the judicial pronouncement that "[p]ublic policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts ... shall be held sacred." (31) It is this tension and potential misnomer of freedom of contract that has troubled legal scholars, philosophers, and economists alike. (32) Freedom of contract has, at some times meant both the ability of the empowered class to economically advantage themselves through the strength of their superior bargaining position and the economic insecurities of the working class; (33) at other times, for example, during the abolitionist movement, freedom to contract has meant the basic right of humans to be able to contract and receive benefits for the services they render. (34)
The tension most important for this article is that between the right of an individual to possess the faculty to contract versus the right of a government to restrict the scope of or even the parties to certain, specified contracts. Illustratively, the difference is the distinction between prohibiting an employer from contracting with "Sarah" to accept a wage below the minimum and prohibiting "Sarah" from entering into any employment agreement whatsoever. While both types of restrictions have existed in U.S. law at different times, the difference in their effect on "Sarah" is apparent, and it is more generally the difference between restrictions based on status and restrictions based on actions. Restrictions based on actions, especially in the realm of public safety, have long been seen "as legitimate exercises of government's acknowledged power to curtail freedom of contract in the interests of health, safety, and public order." (35)
In the United States, few Supreme Court decisions have engendered as much controversy as the 1905 decision Lochner v. New York. (36) In Lochner, the Court invalidated a New York employment law limiting the daily number of hours a baker could work as unduly favoring one party to the contract." (37) The Lochner decision arguably represents the pinnacle of the modern right to contract, free from governmental intrusion. (38) Neither Justice Harlan's dissent which critiqued the opinion for failing to adequately consider a state's legitimate interest in the health and safety of its denizens, (39) nor Justice Holmes's criticism of a judicial attempt to mandate laissez faire policies were sufficient to uphold this specific restriction on contract rights. (40) During the Lochner Era, lasting approximately thirty years, courts struck down laws if they were perceived as encroaching on economic liberty or private contract rights. (41)
In Lochner, as in the employment-based cases that followed, the Court assumed a near equality of bargaining power and found it anomalous that one party would be statutorily favored over the other in that situation. (42) As the Lochner Court put it,
There is no reasonable ground for interfering with the liberty of person or the right of free contract ... [and] there is no contention that bakers as a class are not equal in intelligence and capacity to men in other trades ... or that they are not able to assert their rights and care for themselves without the protecting arm of the state, interfering with their independence of judgment and of action. They are in no sense wards of the state. (43)
Here the restriction/protection of the individual party is framed not only under the guise of freedom of contract, but also an impingement of the rights of the protected party to enter into contracts that legislatures might perceive as disadvantageous or unsafe for that party. While facially neutral, it is not difficult to see how a playing field free from restrictions primarily benefits the party with greater bargaining power by allowing them to extort additional gains without any statutory checks. Throughout the Lochner era, courts invalidated laws that limited the freedom of contract, including restrictions on minimum wage, (44) maximum hour requirements, (45) union participation, (46) federal child labor laws (47) and the mining industry. (48)
In Adair v. United States, the Court invalidated a law which would have prohibited employers from including a provision in their employment contracts prohibiting employees from unionizing. The Court, following Lochner, held that the "employer and the employee have equality of right, and any legislation that disturbs that equality is an arbitrary interference with liberty of contract which no government can legally justify in a free land." (49) In both cases, Justice Holmes dissented vigorously. (50) Holmes examined more critically the concept of freedom of contract and stated: "I confess that I think that the right to make contracts at will that has been derived from the word 'liberty' in the [Constitutional] amendments has been stretched to its extreme by [these] decisions." (51) According to Holmes, the questioned regulation "simply prohibits the more powerful party to exact certain undertakings, or to ... unjustly discriminate on certain grounds ... " (52) History ultimately proved Justice Holmes correct on the matter when the alleged "switch in time" (53) brought about the Supreme Court decision in West Coast Hotel Co. v Parrish which ended the Lochner Era and sanctioned greater regulation and restriction on the freedom of contract. (54)
Under a Fourteenth Amendment due process framework, the Parrish Court analyzed the right of a state legislature to enact a minimum wage law as a question of liberty rather than freedom of contract. (55) The protected interest was the freedom from deprivation of liberty without due process of law. The Court noted that the liberty interest is "liberty in a social organization which requires the protection of law against the evils which menace the health, safety, morals, and welfare of the people.... subject to the restraints of due process, and regulation which is reasonable in relation to its subject...." (56) The same constraints on deprivation of liberty also apply to challenges based on freedom of contract. (57)
Undeniably refuting Lochnerian principles, the Court noted:
[t]here is no absolute freedom to do as one wills or to contract as one chooses. The guaranty of liberty does not withdraw from legislative supervision that wide department of activity which consists of the making of contracts, or deny to government the power to provide restrictive safeguards. (58)
The Parrish decision granted clear power to the authorities to restrict the freedom of contract in certain circumstances, yet while doing so it also noted clear limits on restricting the freedom of contract based on status. The Court noted that arbitrary restraints on the liberty interest of contract are improper. (59) States retain the right to protect an individual from entering into an improvident contract against his health, safety or welfare--but the power is for the benefit of the party at risk of harm. (60)
Likewise, addressing the bargaining power of female employees, the Court noted they were the lowest paid class, with relatively weak bargaining power, and the "ready victims" of those who would take advantage of their social and civil status. (61) The Court also addressed the economic arguments behind its decision, noting the "exploitation of a class of workers who are in an unequal [bargaining] position" that renders then uniquely vulnerable to being denied a living wage, harms their health and well-being, and creates a burden on society. (62)
Expanding the trend of Parrish, the following year the Court decided United States v. Carolene Products Co., holding that laws affecting ordinary commerce should not be found unconstitutional unless the laws cannot be found to rest upon a rational basis. (63) In his famous Footnote 4, Justice Stone delineated a narrower scope of presumption of constitutionality for laws "directed at particular religious, or national or racial minorities." (64) Furthermore, Justice Stone noted particularly that "prejudice against discrete and insular minorities" requires a more meaningful judicial review when the prejudice "tends seriously to curtail the operation of those political processes ordinarily to be relied upon to protect minorities...." (65)
Consequently, the constitutional right of freedom of contract passed to a subset of the freedom of liberty, (66) and with it a due process framework to assess legislatively imposed restraints on the right to contract. Thus the tension between freedom of contract and an ability to enter into a contract, insofar as it relates to certain protected classes, crystallized. The Lochnerian freedom of contract, the freedom that required parties to live with their duly executed contracts however overreaching or disadvantageous to the weaker party, succumbed to the state's interests in regulating "the evil where it is most felt" (67) whether based on the amorphous concept of social or societal health or the state's police power.
The general framework then for evaluating economic regulations, being an issue of freedom of liberty, is to apply a rational basis standard. For cases involving economic regulations that disproportionately affect vulnerable parties or are arbitrary or discriminatory restraints on their liberty, including their freedom of contract, the Court recognized the need for enhanced scrutiny. (68) Keeping clear the distinction between Parrishesque legitimate restrictions on contract and improper restrictions of the ability to contract provides an appropriate judicial framework with which to examine the law. This distinction allows courts to strike down discriminatory restrictions on the right to contract while allowing the government ample authority to continue to regulate economic activity judged only by rationality. In the case of arbitrary or discriminatory laws, the stricter level of scrutiny would apply requiring the state to show a narrowly tailored, compelling governmental interest for the regulation. (69)
Finally, the due process clause continues to protect fundamental rights, those "rights and liberties which are, objectively, deeply rooted in this Nation's history and tradition," (70) and are "so rooted in the traditions and conscience of our people as to be ranked as fundamental." (71) As the definition of fundamental right has shifted to penumbras (72) with much of the jurisprudence since the 1960s focused on the right to privacy, (73) it still appears that the freedom to contract discussed here, the general right of an individual to enter into contracts, satisfies the objective requirement of a deeply held right and liberty. (74) As the protected liberty interest is a "rational continuum ... which recognizes ... that certain interests require particularly careful scrutiny," it cannot be seriously questioned that the freedom to contract is one of the bedrock foundations of our modern commercial society. (75) While it is true that the Lochner era demonstrated a need for legislative intervention in some aspects of contracting, it would be inappropriate to analogize discrete restrictions for a specific type of contract with the broader prescription that would prevent an individual from contractually obligating himself in nearly any type of contract. While past substantive due process jurisprudence "counsels caution and restraint.... [I]t does not counsel abandonment...." (76)
The freedom of contract was imported with the rest of the common law in the founding of our country, and provided a bedrock on which our society was conceived. (77) At that time, it seems likely that the framers' themselves conceived of the freedom of contract as a fundamental right given the level of commerce in the country, but perhaps only for certain qualified male individuals. However, as the rights of all individuals have expanded to equal the rights of the more privileged during the birth of the country, the inherent fundamentality of the right to contract has likewise grown. While restrictions of many shapes and sizes are expected on many different types of contracts, the inherent ability of an individual to contractually obligate himself and likewise receive the obligation of another has roots that go back thousands of years, at least for the privileged. Given the broad scope of authority conveyed by the right to contract which literally extends from birth to death and even beyond, it is one of the most powerful rights we possess. (78)
B. Capacity--Protecting the Incapacitated Party
Societies have long imposed restrictions on an individual's right to contract. (79) In that sense, one may appropriately question whether the right to contract is truly so fundamental as to deny future abridgement. However, a quick examination of many of these historical restrictions, especially those based on capacity, reveals a relatively benign doctrine of contract law. Statutes voiding contracts based on capacity generally do so to protect the individual perceived as the weaker contracting party due to that party's incapacity. (80) Though none of the capacity-based restrictions were imposed invidiously, the remedy is still considered fairly extraordinary as it contravenes the general preference for freedom to contract, (81) and the taw presumes capacity absent evidence otherwise. (82)
Generally, laws protecting the incapacitated party provide that contracts are voidable (83) as opposed to void. (84) States made the contracts voidable instead of void to allow the incapacitated party the opportunity to ratify the contract should that party deem it advisable to do so, while providing the party the freedom to escape the obligation if the party deemed the contract imprudent. (85) The debate on capacity has not been free from challenge. Arguments against voiding contracts based on capacity have been made regarding the potential unfairness to the other contracting party as well as the potential "mixed blessing" of being included in protected class with limited rights. (86)
Finally, courts and legislatures have also had the opportunity to strike at certain classes of contracts that are deemed to be against public policy. (87) In these cases, either the court or policy makers identify types of contracts that are improper for their jurisdiction and prevent their legal enforcement. (88) Historically, contracts void for violating public policy have included protective types such as unconscionable agreements or overreaching restraints on trade or alienability, (89) as well as more general public policy grounds such as contract with businesses not registered in the state, (90) contracts with an illegal purpose or subject matter, (91) or those that regulate a transaction that the jurisdiction believes should not be allowed, such as for-profit surrogacy arrangements. (92) The jurisprudence of voiding contracts based on public policy, other than this brief mention, is largely ignored in this article because the principles involved are inapposite. This article is focusing on states' attempts to disenfranchise an entire class of individuals nearly entirely from their right to contract. This type of restriction is much more comprehensive and debilitating than a broad rule of law applied across society that focuses only on the content of the contract. Conflating the two doctrines serves only to confuse the issue and is therefore avoided.
1. The Contractual Incapacity of Minors
Incapacity due to infancy is especially benign for the incapacitated party as it provides the legal equivalent of a unilateral option for enforcement at the discretion of the minor involved. This incapacity has existed for centuries in the common law. (93) Though the criteria have changed over time and jurisdiction, the general rule still observed in the Restatement (Second) of Contracts is that contracts entered into prior to the day preceding the individual's eighteenth birthday are voidable. (94) Apparent age, maturity, intellectual capacity, and waivers are insufficient to remove the incapacity. (95) Likewise, unless otherwise statutorily mandated, neither emancipation nor marriage removes the incapacity. (96)
Like membership in the groups involving status below, membership in the group of individuals deemed minors is involuntary, arbitrary, (97) and temporarily immutable. Unlike status, the purpose for the contractual incapacity is paternalistic in the sense that minors require the assistance of the legal system to protect them from executing unwise agreements. (98) The incapacity is not, however, absolute.
Minors can enter into binding contracts for "necessaries," (99) as well as a few other limited categories. (100) Lord Coke defined necessaries to include: "necessary meat, drinke, apparel, necessary physicke, and other such necessaries, and likewise for ... good teaching or instruction whereby [the minor] may profit himselfe afterwards." (101) However, even for necessaries, the doctrine of incapacity is based on the protection of the supposedly weaker contracting party. Minors' contractual liability is limited to the fair value of the necessaries received, and as such is more a quasi-contractual liability based on theories of unjust enrichment than on contractual obligations. (102) In any event, this incapacity exists to protect the affected party rather than to deny the party any fundamental right.
2. Mental Incapacity to Contract
The other principal grounds of incapacity in modern times are based on one's mental ability to understand the nature and consequences of one's actions. (103) Similar to the incapacity of minors, this incapacity was developed for the protection of the incapacitated individuals. The Restatement (Second) of Contracts established similar tests for both incapacity based on "mental illness or defect" as well as "intoxication." (104)
In both situations the test is whether the contracting individual was "unable to understand in a reasonable manner the nature and consequences of the transaction," or alternatively, "was unable to act in a reasonable manner in relation to the transaction." (105) The alternative, in case of mental illness or defect and not intoxication, also includes the qualifier: "and the other party has reason to know of his condition." (106) Like the doctrine of incapacity based on age, the doctrine of incapacity based on mental illness or defect is an attempt to provide individuals suffering from the incapacity the ability to escape their contractual obligations provided they meet the criteria set forth above. (107)
In one sense, incapacity based on mental defect is much more difficult to establish than that of infancy given that while age is easily proven, cognitive understanding is an amorphous concept at best. (108) Courts have struggled with distinctions between comprehension and volition, (109) and mental illnesses that occur sporadically with lucid intervals. (110) Yet, in another sense, incapacity based on mental illness or defect can include an individual of any age, indeed age may be a principal factor, and could cover voluntary actions as well as with intentional intoxication. (111)
As with infancy-based incapacity, incapacity based on mental illness or intoxication is not absolute. Necessaries may be legitimately contracted for regardless of the disability, (112) and furthermore, in cases involving mental illness or defect, courts are more concerned with the knowledge of the other contracting party of an individual's defect. (113) Courts' focus on the opposing parties' knowledge of one's mental incapacity reflects the tension between the protectionist purpose of the doctrine and the freedom of all parties to contract and enjoy the benefits of their contracts. By focusing on what the other party to the contract knew of the other's incapacity, courts appear to be focusing on questions of potential overreaching and fraud rather than mental incapacity as such. (114)
Even with a knowledge qualifier, the doctrine of incapacity clearly exists to protect individuals from contracts they are unable to comprehend or avoid because of mental illness or intoxication. (115) The doctrine is not punitive or restrictive since it allows for contracts to be voidable rather than void. (116) In contrast to restrictions based on status which generally utilize an arbitrary, historically-discriminatory categorization, the restrictions on the right to contract based on capacity are not so much restrictions as protections, though some have argued that allowing contractual avoidance based on incapacity could tend to raise the cost of contracting for some if the opposing party were to require additional assurances of ability to contract. (117)
C. Status--To What Extent May the Right to Contract Be Lawfully Limited?
In contrast to beneficent limits imposed on the right to contract by one's incapacity are those regulations that purport to restrict the right to contract perniciously, generally based on membership in a demarcated class. The prototypical example of this type of legislation would be the Black Codes, which purposefully limited slaves' right to contract. (118) The law thus faces an inherent contradiction since the right to contract has long been subject to state-imposed limitations. Can a right be both fundamental and subject to a fairly large amount of arbitrary regulation? Or does the fact that a right is subject to a significant amount of regulation mandate a finding that the right is not fundamental? In the case of status-based restrictions on the right to contract, this article argues that the two propositions can be viewed disjunctively. Whereas generally applicable, limited restrictions on the ability to contract have long been accepted, discriminative, highly targeted attempts to disenfranchise a vulnerable population from a broadly held right to contract and participate in a mercantile society should be subject to legal limitations.
It is clear that the right to contract is subject to some limitation. "[N]either property rights nor contract rights are absolute ... Equally fundamental with the private right is that of the public to regulate it in the common interest...." (119) Faced with that strong pronouncement from the Supreme Court, it appears that the ability of a sovereign to regulate the right to contract is clearly pronounced at least in regard to the "common interest." History is littered with examples of government intervention as to the right of contract based on status, though a historical review tends to show the practice as outdated and discriminatory, (120) and finds many courts seeking legal cover for striking down this type of status-based legislation. (121)
What is clear from the following text, however, is that a restriction of rights based on status has generally enjoyed legal and societal approval. On their face, none of the laws based on status discussed below existed for any reason other than to restrict the rights of a vulnerable class of individuals. In contrast to the laws regarding capacity to contract, laws regarding status to contract have nearly always been pernicious. The fact that the laws were malevolent, however, does not necessarily mean they were invalid--at least under the then-applicable law. The evolution of the right to contract into a fundamental right, however, is why contemporary laws that attempt the same type of discriminatory restrictions should be struck down. That is the crux of the issue we face with the Hammon-Beason Act regarding unauthorized immigrants' right to contract.
1. Race and Servitude--Status as Property
Race has long been the field most dominated by discriminatory encroachments on the right to contract. The purpose behind the restriction on the right to contract is clear. By eliminating the ability of an individual to privately order his affairs, accrue wealth, engage in commerce, or obtain pay for his labor, those making the rules were able to ensure continued dominance over the affected group while also reinforcing the societal belief that the group was less deserving of fundamental rights. Faced with the legal proposition that contract rights are subject to regulation, courts have sometimes created distinctions without a difference or simply adopted hyper-formalistic decisions ignoring the broader question of fundamental rights.
In that vein, the judicial treatment of race and servitude, two distinct concepts, has been strongly interconnected since the birth of the United States. (122) It is difficult to discuss concepts behind restrictive laws based on race without recognizing the role slavery played or had played at the time states enacted various restrictions. (123) Likewise, it is important not to focus too much on the role servitude played, as not all race-based restrictions were driven by this unique interrelationship. In this section both race and servitude will be discussed, together where appropriate, separately otherwise.
Rights restrictions based on servitude have a long history dating from pre-Renaissance cultures, including, notably, the Roman civil code, (124) and ancient Greek law. In ancient Greek law, freedom of contract was a foundational principle of their society. (125)
The doctrine of freedom of contract was so strong at Athens that it was possible to contract out of the protection of the law, or to agree that a contract should take precedence over law, or to expect a court of law to uphold a contract which is publicly admitted to have constituted a conspiracy to commit an unlawful act. (126)
Even with this strong concept of the legal supremacy of contract, in ancient times slaves lacked any rights, including, of course, the right to contract. (127)
Slaves themselves were generally considered chattel, or res mancipi, (128) and as such were freely transferable. The restriction of the right to contract in Rome was predicated on this notion. Even when the restriction was relaxed, it was done only for the interest of the owner, and only then through the creation of a legal fiction. (129)
In the territory that became the United States, the concepts of slavery and race became generally conflated to the point where to debate one was to debate the other. (130) Under that framework, any law affecting slaves would automatically and only affect blacks. In addition, states also passed laws based on race to reach free blacks who would not be subject to the laws on slavery. (131) In both instances, blacks were denied rights based on status alone (either as a slave or a black person), a situation which was not legally rectified in large part until the Civil Rights Act of 1964. (132)
Especially in the south, states and localities acted to create laws and guidelines to regulate slave-based commerce and those slaves' and free blacks' interactions with society. (133) Not until the Reconstruction Era Amendments following the Civil War did the United States outlaw slavery, (134) grant citizenship to all persons born in the United States, ensure that states could not enact laws abrogating the privileges or immunities of U.S. citizens, ensured due process and equal protection of the laws, (135) and guarantee the right of a citizen to vote without regard to "race, color, or previous condition of servitude." (136) However, even these facially unambiguous amendments were insufficient to guard against states' attempts to restrict the rights of individuals based on race or prior status of servitude, especially as it relates to the right to contract.
Historically, U.S. slaves could not enter into legally binding contracts, sue or be sued, hold title to property, or enter into a legally binding marriage. (137) Free blacks, who were legally permitted to marry, were denied the right to contract for marriage if the marriage was with a white woman. (138)
The North Carolina Supreme Court held "[u]nder our system of law, a slave can make no contract....He has no legal capacity to make a contract. He has no legal mind." (139) The Alabama Supreme Court concurred, noting slaves' "absolute civil incapacity" and held them to be "incapable of owning property, or of performing any civil legal act...." (140) In that case the Alabama Supreme Court noted that Alabama law "recognize[d] no other status" than free or slave, and slaves were lawfully incapable of possessing civil rights and legal capacity. (141)
In addition to the numerous legal opinions that restricted or eliminated the rights of slaves to contract, (142) states had long had "slave codes" (143) or "Black Codes" to regulate the legal rights, liabilities and procedures for blacks and slaves both before and after the Civil War. (144) Following the Civil War, the Black Codes were either amended or new ones implemented to ostensibly comply with the Reconstruction Era Amendments while maintaining blacks in a subservient role. (145) The original slave or Black Codes included the standard prohibitions on owning property, traveling, working for pay, or contracting for the purchase or sale of goods. (146)
Louisiana's Code Noir prohibited blacks from entering into sales agreements of any type, and also punished anyone who would purchase anything from them. (147) The Code Noir further prescribed any ownership of real or personal property by slaves, and that any real or personal property acquired by slaves through work, gift, inheritance or otherwise would pass by law to their masters. (148) Even freeborn or freed slaves faced additional civil incapacitation as the Code Noir voided any testamentary or inter vivos gift to them and instead directed such gifts to "the benefit of the nearest hospital." (149)
Later Black Codes, unable to focus on the condition of servitude that permeated prior ones, were unrepentantly clear in purpose even while granting certain rights. Louisiana's Black Code of 1865 included prohibitions on renting property, as well as Section 8, which prevented any black person from "sell[ing], barter[ing], or exchang[ing] any articles of merchandise or traffic within said parish without the special written permission of his employer, specifying the article of sale, barter or traffic...." (150) North Carolina's Black Code also contained peculiar language regarding the right to contract:
[A]ll contracts between any persons whatever, whereof one or more of them shall be a person of color, for the sale or purchase of any [domestic farm animal], whatever may be the value of such articles, and all contracts between such persons for any other article or articles of property whatever of the value of ten dollars or more; and all contracts executed or executory between such persons for the payment of money of the value of ten dollars or more, shall be void as to all persons whatever, unless the same be put in writing and signed by the venders or debtors, and witnessed by a white person who can read and write. (151)
In the Black Codes discussed above, basic rights to contract were severely restricted based explicitly on race and former slave status. These restrictions continued in various forms until the Civil Rights Era and the enactment of the Civil Rights Act of 1964, discussed in Section III.D below. Even then, it is noteworthy that the mechanism that removed the restrictions was legislative rather than judicial, a distinction that has framed the current debate on contract rights based on status.
2. Gender as Status--An Evolution of Contractual Suffrage
Gender-based impingements, such as race or servitude-based constraints, were also used to perpetuate societal power imbalances by discriminatorily limiting the legal rights of women. In the United States, as recently as the early 1900s, married women were deemed to have lost their legal personhood through civiliter mortua or "civil death" occasioned by the legal union with their husband. (152) In the nineteenth century, the U.S. Supreme Court held in Bradwell v. Illinois that a married woman could not be an attorney due to her incapacity to contract with a third party. (153) Justice Bradley in his concurrence went further to note:
Man is, or should be, woman's protector and defender. The natural and proper timidity and delicacy which belongs to the female sex evidently unfits it for many of the occupations of civil life....So firmly fixed was this sentiment in the founders of the common law that it became a maxim of that system of jurisprudence that a woman had no legal existence separate from her husband....(154)
States' deprivation of married women's right to contract was judicially condoned through at least the mid-1900s. (155) In United States v. Yazell, (156) the Supreme Court upheld a Texas Jaw mandating the doctrine of coverture, (157) which incapacitated a married woman from contracting away rights to her separate property without a court decree removing that incapacity,ass While the Court noted the institution of coverture existed in only 11 states at the time and therefore the problem was not a "battle to vindicate the rights of women," (159) it held that states had substantial latitude to regulate in the arenas of family and family-property arrangements. (160) As to the right to contract, the Court warned against "establish[ing] a principle which might cast doubt upon the effectiveness ... of the laws of 11 other States relating to the contractual positions of married women" (161) except in in instances "where clear and substantial interests in the National Government, which cannot be served consistently with respect for such state interests, will suffer major damage if the state law is applied." (162)
Nor is the United States viewpoint unique in scope or type. The common law as developed in England long treated women as an inferior legal person in their ability to contract, deal with real property and inheritance and succession. (163) Similarly, the Napoleonic Code in eighteenth century France prohibited a woman from entering into contracts or otherwise disposing of property. (164) This treatment is pervasive and many countries' legal systems have long been utilized to ensure the deference of women to their male caretakers be they fathers, brothers, or husbands by denying that the right to contract is a fundamental right of an individual.
It has not been until recently, notably through Title VII of the Federal Civil Rights Act of 1964 prohibiting gender-based employment discrimination, (165) and more fully developed case law under the guise of equal protection, (166) that these earlier prohibitions on some types of gender-based discrimination have been cast aside, though some contract limitations based on status persist. (167) At the constitutional level, equal protection arguments have been utilized to strike down discriminatory gender-based legislation using an intermediate level of scrutiny. (168) Challenges have utilized both a traditional suspect class analysis, (169) as well as distinguishing laws that infringe on "basic" instead of "non-basic" rights in determining the level of scrutiny to be applied. (170) In the latter context, any law attempting to restrict a "basic" right must be judged using more than a rational basis analysis. (171)
Additionally, some courts have focused instead on the unreasonable exercise of power in enacting gender-based legislation. (172) The New Jersey Supreme Court summed up the evolution in gender-based restrictions in the law noting in closing that "[w]hile the law may look to the past for the lessons it teaches, it must be geared to the present and towards the future if it is to serve the people in just and proper fashion." (173) It is in this context that judges have been less willing to uphold laws that restrict women's ability to contract for gainful employment. "Such tender and chivalrous concern for the well-being of the female half of the adult population cannot be translated into legal restrictions on employment opportunities for women." (174)
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|Title Annotation:||I. Introduction through II. Contract as a Fundamental Right C. Status - To What Extent May the Right to Contract Be Lawfully Limited? 2. Gender as Status - An Evolution of Contractual Suffrage, p. 51-76|
|Author:||Weber, David P.|
|Publication:||Yale Human Rights and Development Law Journal|
|Date:||Jan 1, 2013|
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