Mubarrat Choudhury Law III 12/2/13 Fletcher v.

Peck (1810)

Facts: In 1795, the Georgia state legislature passed a law awarding territory to four companies, which sold 35 million acres of land (known as the Yazoo), for one and a half cents per acre. Nearly every member of the Georgia state legislature was bribed to pass this law. In 1796, the Georgia state legislature passed a new law declaring the sales transactions of the land to be illegitimate. In 1800, John Peck bought land that was a part of the original law and later sold the land to Robert Fletcher three years later, which Peck claimed that the past sales of the land had been legitimate. Fletcher purchased 15,000 acres from Peck in 1803. Fletcher sued Peck in order to establish the constitutionality of the 1796 act. Fletcher essentially argued that since the original sale of the land was illegitimate, Peck couldnt sell the land and thus breached the contract. Appellant Argument: Fletcher argued that because of the legislation passed in 1796, the contract between him and Peck is null and void and that Peck hadnt any legal right to sell the land. Fletcher had bought the land in good faith and because of the 1796 legislation, Peck was guilty of breach of contract. Appellee Argument: The contract was couldnt be voided between Fletcher and Peck because under Contract Clause, the government cannot infringe on property rights and contracts, thus the legislation passed in 1796 had no effect. Issue: Could Governments invalidate contracts even when they are in bad faith and is this constitutional? Decision: In a unanimous decision, the court decided that the State of Georgia had violated the Constitution by repealing the land grants.

Mubarrat Choudhury Law III 12/2/13 Reasoning: The law passed by the Georgia State Legislature in 1796 was essentially unconstitutional because it is in violation of the Contract Clause (Article I, Section 10). The clause prohibits states from enacting any law that impairs contract/property rights. The court ruled that even though the law passed in 1795 was under bad faith, the state of Georgia repealing the land grants in order to reverse the corruption wasnt correct. Significance: This court case was significant because it particularly defined what exactly the Contract Clause meant, it was the first time the U.S Supreme Court overruled a state legislation, the court recognized that the Contract Clause was necessary in order to limit any state regulation in economic matters regarding contracts and property rights, and established that state land grants are under the same law as contracts between private individuals.