Sunday, June 30, 2013

Gay Marriage and The Obligations of Contracts

No state shall ... pass any ... Law impairing the Obligation of Contracts ...
(U.S. Constitution, Article I, Section 2)

Which raises an interesting question. The recognition of gay marriage by a state changes the meaning of terms, such as "spouse," that are used in private contracts. Suppose an employment contract includes health insurance for the employee's spouse. Does that mean that, when gay marriage is legalized, same sex spouses are automatically covered by existing contracts? If so, the state would appear to have changed the terms of, which would seem to violate the contract clause.

In that particular case, one could argue that the change expands rather than impairs the obligation, but one can easily enough imagine the reverse situation, where the result of a legal change is that some people who had been considered spouses when the employment contract was signed ceased to be.

And if the answer is that changes in the meaning of the terms in a contract do not "impair the obligations," it is hard to imagine anything a state government might want to do along those lines that could not be disguised as a redefinition of terms.

9 Comments:

At 12:10 PM, June 30, 2013, Anonymous Anonymous said...

I don't see that this is changing the terms. It seems entirely reasonable to interpret "spouse" to mean "spouse according to current law" and not "spouse according to the law when the contract was signed". After all, we don't interpret the contract to cover only people who were already married at the time of signing: getting married after signing changes the obligations under the contract, but we don't consider it to be rewriting the terms themselves (but rather applying the same terms to newly changed circumstances). I would interpret changing marriage law similarly.

> And if the answer is that changes in the meaning of the terms in a contract do not "impair the obligations," it is hard to imagine anything a state government might want to do along those lines that could not be disguised as a redefinition of terms.

Perhaps, but if you say changes in meaning do impair the obligations, then how can the state change its laws at all? For example, some contracts involve testing for illegal drugs. You can't legalize any drug, or outlaw any new drug, without changing what that means. And practically anything could be written into a contract. If you insist that a state can never do anything that might change the interpretation of a contract, then that's tantamount to saying it can never do anything at all.

 
At 12:11 PM, June 30, 2013, Anonymous Miko said...

If an unmarried person signs a contract under which they would receive spousal benefits and that person later gets married with a license certified by the state, their spouse would likewise be covered by the existing contract, so this perceived issue (of state action leading to a change in the interpretation of a contract) is actually orthogonal to who the spouse is.

 
At 12:26 PM, June 30, 2013, Blogger dWj said...

It seems that often terms that are in a contract are intended to change with any change in the meaning; the indirection inherent in the word is a feature, not a bug. A contract indicating that payment is to be made to a person's bank account or place of business would not mean to indicate a defunct account if the creditor changes bank accounts or an old place of business if the place of business moves.

 
At 4:26 PM, June 30, 2013, Blogger John David Galt said...

I don't see why you bring this up, when it is a type of problem you disposed of in Law's Order -- obviously, if such a contract is disputed, a judge will try to decide what the parties would have agreed to had they known the new information when it was written.

(The noteworthy exception arises when some interfering law, such as a law against discriminating against gays or married people, forces the outcome to go some way the parties would not have wanted. I would love it if the courts were still willing to put a contract above that type of law, but I don't think they will any longer.)

 
At 10:06 PM, June 30, 2013, Blogger cryptical said...

Another interesting problem arises from organizations that provide benefits to same-sex "domestic partners" because marriage wasn't available to them. Now that marriage is available, will they drop the coverage unless the couple gets married, or if they don't will they then have to extend the benefits to heterosexual couples who don't want to get married.

 
At 1:59 AM, July 01, 2013, Anonymous BukLau said...

Just a correction: that quote is found in Article I, section 10, clause 1

 
At 8:31 AM, July 02, 2013, Anonymous Anonymous said...

Since that clause was held to allow states to impose moratoria on mortgage repayments during the Great Depression, isn't it just yet more "living constitution" road kill?

 
At 8:16 AM, July 03, 2013, Anonymous Perry E. Metzger said...

I was about to say what Anonymous just said -- that clause has been a dead letter for eighty years at least.

 
At 12:50 AM, July 26, 2013, Blogger Bryce Thomason said...

One of the "gay agenda recent victories was established when homosexual autoworkers were successful in coercing the UAW management to quietly slip their gay and lesbian partners into the autoworkers benefit package...These same-sex gay and lesbian people had nothing to do with the auto industry and didn't work for the companies or earn these benefits.

 

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