The United States Constitution (Art I, §10) states: “No State shall…pass any…Law impairing the Obligation of Contracts….”  This is the so-called “Contract Clause.”  The Ohio Constitution has a similar provision:  “The general assembly shall have no power to pass…laws impairing the obligation of contracts.” (Ohio Constitution §2.28). The main purpose of the Contract Clauses was to protect creditors against debtor relief laws.

The key cases decided under the Contract Clause are:

Aetna Life Ins. Co. v. Schilling (1993)

Ross v. Farmers Ins. Group of Companies (1998), 82 Ohio St.3d 281:

For instance, we held in Aetna Life Ins. Co. v. Schilling (1993), 67 Ohio St.3d 164, 616 N.E.2d 893, syllabus, that a statutory provision applied to contracts that were entered into before the effective date of the statute would impair the obligation of contracts in violation of Section 28, Article II of the Ohio Constitution. We noted that if the statutory provision at issue in Schilling were applied to that case, “[it] would essentially change the contract which existed prior to the effective date of the statute.” Id. at 167, 616 N.E.2d at 895. Moreover, in Burtner-Morgan-Stephens Co. v. Wilson (1992), 63 Ohio St.3d 257, 586 N.E.2d 1062, syllabus, a unanimous court reached a similar conclusion when it held that, pursuant to Section 28, Article II of the Ohio Constitution, a statute could not be retroactively applied to determine the distribution of royalties that were provided for in an agreement entered into prior to the enactment of the statute. In Kiser v. Coleman (1986), 28 Ohio St.3d 259, 28 OBR 337, 503 N.E.2d 753, syllabus, a majority of this court held that the retroactive application of statutory provisions to land installment contracts that were in existence at the time of the enactment of the statutes
violated Section 28, Article II of the Ohio Constitution by impairing an obligation of contract.