Washington state courts rejected landlords' Contract Clause challenge to COVID-19 eviction moratoriums in the 2023 Gonzales v. Inslee decision, showing how courts now give states wide latitude to modify private contracts when advancing public policy goals. The Supreme Court applies a two-part test asking whether the impairment is substantial and whether the state law is reasonable.
Article I, Section 10 prohibits states from passing any "Law impairing the Obligation of Contracts," blocking state legislatures from relieving people of their contractual debts or obligations. The Framers included this provision because several states had passed laws canceling debts after the Revolutionary War, discouraging commerce and credit extension. The clause protects private contracts between individuals and businesses, and applies higher scrutiny when states try to escape their own contractual obligations. However, courts allow states to override contracts that violate public policy (like contracts for illegal services) or when emergency police powers justify intervention, as demonstrated during the Great Depression and COVID-19 pandemic.