Fletcher v. Peck, an 1810 Supreme Court case, marked the first time the Supreme Court of the United States interpreted the contract clause of the U.S. Constitution. The clause prohibits states from passing any law that impairs the obligation of contracts. In 1795, members of the Georgia state legislature took bribes to grant land to several companies. The next legislature passed a law that revoked (took back) the grants, but some of the land had already been sold by the companies. The new owners of the land argued that by revoking the grants, Georgia had interfered with a lawful contract. The Supreme Court agreed with the landowners and declared the original sale legal. By voiding the Georgia law, the court extended its power of judicial review (authority to declare laws unconstitutional) to include state laws.
