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For the first time the Supreme Court ruled a state statute unconstitutional, declaring
that a Louisiana law deprived a person of the right to make contracts. The particular law in question
prohibited people from making insurance contracts with insurance companies operating from within other
states. Allgeyer and Company had entered into an insurance contract with a New York company. The
Court ruled that the Due Process clause of the Fourteenth
Amendment protected the right to make contracts. The decision became a key case in establishing
the “liberty of contract” doctrine. The doctrine established the principle that freedom of contract
was the rule and restraint the exception, and that states must justify any abridgement of that right. Full Text:
Allgeyer vs. Louisiana, 165 U.S. 578 (1897) |