What is the purpose of the strict scrutiny applied by the Supreme Court under the Contract Clause?

The purpose of the strict scrutiny applied by the Supreme Court under the Contract Clause is to ensure that any state action that impairs the obligation of contracts serves an important public interest. Under this standard, the court closely examines state laws or actions that potentially interfere with existing contracts to determine if there is a compelling state interest at stake and whether the measures taken are narrowly tailored to achieve that interest.

Strict scrutiny is the highest standard of review used by courts and is typically reserved for cases involving fundamental rights or suspect classifications. In the context of the Contract Clause, it serves as a strong safeguard against state legislation that could unjustly disrupt existing contractual relationships. By requiring a compelling justification for such impairments, the Court aims to protect the sanctity of contracts, which is foundational to economic stability and predictability in commerce.

This understanding emphasizes the balance between the right of states to regulate affairs within their borders and the obligation to uphold contractual agreements, recognizing that while states have interests to promote public welfare, these must not come at the cost of undermining contractual obligations without sufficient justification.