Contract, Freedom Of

Contract, Freedom Of, sometimes termed liberty of contract, was a private‐law concept imported into constitutional jurisprudence in the heyday of substantive due process. The term, credited to Justice Rufus Peckham in Lochner v. New York (1905), was popularized a generation previously by Justice Stephen J. Field. The doctrine holds that parties capable of entering into a contract and giving their consent to its terms ought not to be curbed by the state, save to protect the health, welfare, and morals of the community or to prevent criminal activities.

Gilded‐age judges incorporated the freedom of contract doctrine into the Constitution by reading the Fifth and Fourteenth Amendment bars upon deprivation of liberty or property without due process of law to extend to employment contracts. In a series of cases, the Supreme Court declared that states could not deprive citizens of a state the right to make contracts out of the state (Allgeyer v. Louisiana, 1897) or to set maximum hours for bakers (Lochner). Moreover, the federal government could not prevent an employer from dismissing an employee upon the grounds of union membership (Adair v. U.S., 1908). The Court retreated from this position on employment contracts in Muller v. Oregon (1908) and Bunting v. Oregon (1917), but in the 1920s the tide of opinion on the Court again flowed in favor of freedom of contract. Its high‐water mark was Adkins v. Children's Hospital (1923), overturning minimum wage provisions in the District of Columbia.

Freedom of contract doctrine reified extra constitutional theories of the value of labor. The doctrine was a centerpiece of laissez‐faire jurisprudence. Judicial faith in the natural laws of economics—the free market ideology of “classical” economists—provided another foundation for freedom of contract.

In the main, freedom of contract favored powerful employers. The language of Lochner and Adair gave little hint of political partisanship or class bias, but judges were well aware of the consequences of the doctrine in the workplace. Although federal courts usually deferred to the police power of states, from its inception freedom of contract was a much‐controverted doctrine. Justice Oliver Wendell Holmes rebuked the majority in Lochner that “the Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics” (p. 75). Theodore Roosevelt hammered at Lochner and Adair in his 1912 campaign for the presidency. Freedom of contract was largely abandoned in the late 1930s, part of a broader pattern of judicial deference to legislatures on economic questions.

See also Due Process, Substantive; Labor; Laissez‐Faire Constitutionalism; Police Power.

Peter Charles Hoffer