HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.
![handle is hein.crs/govenmo0001 and id is 1 raw text is:
Congressional Research Service
Informing the legislative debate since 1914
November 20, 2023
42 U.S.C. § 1981's Contract Clause: Racial Equality in
Contractual Relationships
Among federal statutes that address racial discrimination,
42 U.S.C. § 1981's contract clause uniquely focuses on
guaranteeing a person's equal right to make and enforce
contracts without regard to race. More specifically,
§ 1981's contract clause provides that [a]ll persons within
the jurisdiction of the United States shall have the same
right in every State and Territory to make and enforce
contracts . . . as is enjoyed by white citizens.
This In Focus explains this provision's history,
enforcement, and interpretation, and discusses examples of
its application to different contractual relationships. (This
summary does not address a related provision, 42 U.S.C. §
1982, concerning racial equality in property-related rights.)
Historical Background
Section 1981 was originally enacted as § 1 of the Civil
Rights Act of 1866, an immediately post-Civil War
legislative effort to ensure that newly freed slaves received
the same rights as other citizens. The Civil War ended in
April 1865; the Thirteenth Amendment, which abolished
slavery in the United States, was ratified later that year. In
April 1866, the Civil Rights Act of 1866 became law.
Following ratification of the Fourteenth Amendment,
Congress reenacted the 1866 Act as part of the Enforcement
Act of 1870, including § 1 of the 1866 Act. The statute was
recodified in 1874, but its basic coverage did not change
until 1991. It is now codified at 42 U.S.C. § 1981.
Enacting basis
The Supreme Court has interpreted § 1981 as enacted under
Congress's authority to enforce the Thirteenth and
Fourteenth Amendments to the Constitution. Laws
enforcing the Thirteenth Amendment concern, among other
things, eliminating the badges and incidents of American
slavery, and may apply to private and state actors. Laws
enforcing the guarantees of Section 1 of the Fourteenth
Amendment, including equal protection of the laws, need
not relate to slavery and may address discrimination based
on race as well as other characteristics such as sex. Such
legislation, however, may only apply to state actors.
Section 198 I's Contract Clause
Section 1981(a) enumerates several rights, guaranteeing
[a]ll persons the same right, for example, to the full and
equal benefit of all laws and proceedings for the security of
persons and property as is enjoyed by white citizens.
Claims under § 1981, however, have largely arisen under its
contract clause-that is, statutory language providing for
the same right ... to make and enforce contracts that
white citizens possess. This right to make and enforce
contracts applies to private and governmental actions; §
1981's statutory text expressly protects against impairment
by nongovernmental discrimination and impairment under
color of State law.
General Backgroun d
An outright refusal to contract with a person or party
because of race is perhaps the plainest violation of § 198 I's
contract clause. In its 1976 decision in Runyon v. McCrary,
for example, the Supreme Court addressed § 198 I's
application to the refusal by nonsectarian private schools to
contract with parents to provide educational services
because the children seeking enrollment were Black. When
analyzing those claims, the Court described the refusals as
amount[ing] to a classic violation of § 1981.
In the Civil Rights Act of 1991, Congress amended § 1981
to further clarify and define the contracting conduct under
its protection. Congress amended the law in response to the
Supreme Court's decision in Patterson v. McLean Credit
Union, which construed § 1981 to exclude from its reach
certain contract-related racial discrimination that occurs
after a contract is formed. As amended, § 1981 now defines
the right to make and enforce contracts to include the
making, performance, modification, and termination of
contracts, and the enjoyment of all benefits, privileges,
terms, and conditions of the contractual relationship.
Thus, § 1981's scope is not limited to racial discrimination
in the formation of a contract. Racial discrimination in the
performance or termination of a contract, among other
things, may violate § 198 I's contract clause. A termination-
related claim, for example, might allege that a party
discriminatorily terminated a contract to sell property upon
learning that the buyers were Black.
In its 2008 decision in CBOCS West, Inc. v. Humphries, the
Supreme Court interpreted § 1981 to also prohibit
retaliation for reporting a violation of a contract-related
right under the statute.
Varied Contexts of § _981 Claims
Contractual relationships play out in a range of settings and
industries. Such relationships may arise in relation to
employment, the provision of goods and services,
financing, or business partnerships, for example. A federal
court's analysis of a § 1981 claim can vary based on
differences in context and the contractual relationship at
issue.
Employment Contracts
Many § 1981 claims concern discrimination arising out of
contractual employment relationships. These claims may
allege various forms of racial discrimination in the](ViewImageLocal?handle=hein.crs/govenmo0001&div=1&collection=&method=preview&ext=.png&size=3)