In an earlier post I wrote that the Court’s decision invalidating as a kind of constitutional duress the threatened cut-off of all Medicaid funds to states that refused to pay a modest share of the enlargement was bad contract law.   Similar arguments were waved aside in the late 1980s in Bowen v. Public Agencies Opposed to Social Security Entrapment and more recently in Rumsfeld v. Forum for Academic and Institutional Rights (Roberts, C.J., writing).  In straight contract cases the argument is regularly rejected when franchisees object to contractually allowable franchise termination or alteration, pleading their large prior investments in the franchise.  Or imagine a commercial tenant who has a lease in commercial premises in which he has invested heavily and where he has lots of good will (e.g., a neighborhood restaurant).  The lease is terminable after five years on sixty days’ notice and the lessor insists on a greatly increased rent.  I submit that the tenant’s complaint that this constituted duress would get nowhere.  The analogy of states to hapless consumers as in some stretchy unconscionability cases (e.g., Williams v. Walker-Thomas Furniture Co.) is obviously inapposite.

Posted in Post-decision Health Care Symposium

Recommended Citation: Charles Fried, Online symposium: The Court’s bad contract law, SCOTUSblog (Jul. 6, 2012, 1:47 PM), http://www.scotusblog.com/2012/07/online-symposium-the-courts-bad-contract-law/