United States v. Winstar Corp.

United States v. Winstar Corp., 518 U.S. 839 (1996), was a decision by the United States Supreme Court, which held that the United States Government had breached its contractual obligations, and rejected the Government's “unmistakability defense”—that surrenders of sovereign authority, such as the promise to refrain from regulatory changes, must appear in unmistakable terms in a contract in order to be enforceable.

Winstar arose as a consequence of the savings and loan crisis. Federal regulators extended generous tax incentives to financial institutions which took over failing thrifts-Congress later substantially changed these advantages and one of the successor banks successfully sued. The Appeals Court for the Federal Circuit found a breach of contract and awarded damages—the Supreme Court upheld the lower court decision. Winstar cases are still in litigation with multi-million dollar pay outs to the plaintiffs. Whether or not the current rule making by the SEC and Federal Reserve to deal with the financial crisis of 2007-2008 will lead to a new round of law suits remains to be seen.

See also

Further reading

  • Citron, Roger D. (2002). "Lessons from the Damages Decisions Following United States v. Winstar Corp.". Public Contract Law Journal 32 1.
  • Cramer, M. T. (1997). "Contracts Written in Stone: An Examination of United States v. Winstar Corp.". Pepperdine Law Review 25 567.
  • Goldberg, Daniel S. (1997). "Government Precommitment to Tax Incentive Subsidies: The Impact of United States v. Winstar Corp. on Retroactive Tax Legislation". American Journal of Tax Policy 14 1.
  • Stouck, Jerry; Lipson, David R. (1996). "United States v. Winstar Corp: Affirming the Application of Private Contract Law Principles to the Federal Government". Federal Circuit Bar Journal 6 315.

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