moratorium


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Moratorium

A suspension of activity or an authorized period of delay or waiting. A moratorium is sometimes agreed upon by the interested parties, or it may be authorized or imposed by operation of law. The term also is used to denote a period of time during which the law authorizes a delay in payment of debts or performance of some other legal obligation. This type of moratorium is most often invoked during times of distress, such as war or natural disaster.

Government bodies may declare moratoria for a broad range of reasons. For example, a local government may attempt to regulate property development by imposing a moratorium on the issuance of building permits. The legality of such a moratorium is generally determined by measuring its impact on the affected parties. In 1987 the U.S. Supreme Court held that certain moratoria on property development may be unconstitutional takings, thus making it more difficult for local governments to slow development in their communities (First English Evangelical Lutheran Church v. Los Angeles County, 482 U.S. 304, 107 S. Ct. 2378, 96 L. Ed. 2d 250). On the other hand, in 1995 the Court upheld a thirty-day moratorium on lawyer advertising that was challenged as an infringement of First Amendment rights (Florida Bar v. Went For It, Inc., 515 U.S. 618, 115 S. Ct. 2371, 132 L. Ed. 2d 541).

Many state legislatures have passed moratorium legislation in response to popular demand for debt relief during emergencies. The constitutionality of these statutes is determined using a two-pronged analysis. First, the courts consider the effect of the moratorium on the rights of the parties to the impaired contract. If the moratorium changes only the remedy for breach and not the terms of the contract, it is generally upheld (see Sturges v. Crowninshield, 17 U.S. [4 Wheat.] 122, 4 L. Ed. 529 [1819]). Second, if the moratorium is a response to a bona fide emergency, it is upheld (see Johnson v. Duncan, 3 Mart. 530 [La. 1815], upholding a moratorium passed when the British invaded Louisiana in 1814).

As a function of its Police Power, a state may suspend contractual rights when public welfare, health, or safety are threatened. However, this police power is limited by standards of reasonableness. During the World War I housing shortage, some New York landlords raised rents to exorbitant levels and evicted tenants who failed to pay. In response to what it perceived as a public health and safety emergency, the state legislature passed a law that limited rentals to reasonable amounts, gave courts authority to determine reasonableness, and prohibited landlords from evicting tenants willing to pay reasonable rents. The law was sustained by the U.S. Supreme Court in Marcus Brown Holding Co. v. Feldman, 256 U.S. 170, 41 S. Ct. 465, 65 L. Ed. 877 (1921).

An example of a contemporary debt moratorium is the Minnesota Mortgage Moratorium Act (1933 Minn. Laws 514), passed by the Minnesota legislature in response to a sharp rise in foreclosures on mortgaged farm property. The constitutionality of the act was challenged in Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 54 S. Ct. 231, 78 L. Ed. 413 (1934), in which the Supreme Court upheld the legislation based on five criteria: a bona fide emergency existed; the statute addressed a legitimate societal interest; debt relief was granted only under limited conditions; contractual rights were reasonably protected; and the legislation was of limited duration. This act was extended until 1942. Fifty years later the Minnesota legislature responded again to public pressure to relieve farm debts by passing another Mortgage Moratorium Act (Minn. Stat. § 583.03 [Supp. 1983]).

Further readings

Amundson, Roland C., and Lewis J. Rotman. 1984. "Depression Jurisprudence Revisited: Minnesota's Moratorium on Mortgage Foreclosure." William Mitchell Law Review 10.

moratorium

n. 1) any suspension of activity, particularly voluntary suspension of collections of debts by a private enterprise, or by government or pursuant to court order. 2) In bankruptcy, a halt to the right to collect a debt. In times of economic crisis or a natural disaster like a flood or earthquake, there may be a moratorium on foreclosures or mortgage payments until the public can get back to normal activities and earnings.

moratorium

noun abeyance, break, cessation, close, deferral, delay, desistance, discontinuance, end, halt, hold, interim, interval, leaving off, lull, pause, period of obligatory delay, postponement, recess, respite, rest, standstill, stop, stoppage, suspension, tempooary halt, temporary relief, termination, wait, waiting period
Associated concepts: moratorium acts, moratorium on reeayment of debt
See also: adjournment, cancellation, cessation, deferment, delay, discontinuance, extension, hiatus, pause, pendency, reprieve
References in periodicals archive ?
Central bank, Bank of Ghana's, head of Other Financial Institutions Supervisory Department, Raymond Amanfu, said, 'We have extended the moratorium by 30 days and we have asked them to address issues which they themselves have concerted to in the report and per a meeting we had with them on Monday and they answered partially and we think we are not satisfied with meeting the conditions as we have given them.
The moratorium was lifted after the massacre of 134 children in a terrorist attack last December at an army state school in Peshawar, northwestern provincial capital.
At the moment, the moratorium area covers the whole territory of Bishkek.
Two Metro Detroit communities enacted moratoriums to try to thwart oil drilling projects.
Dayton's spokesman, Matt Swenson, issued a statement saying the governor "lacks the authority to unilaterally impose his own moratorium.
Councilor Sharyl Brannon-Abbasapour voted against imposing a moratorium.
The proposal for extending the moratorium was made by the ultranationalist anti-EU party Ataka, a key ally of the Socialist-led coalition government.
We are working with the Health Board to confirm the transitional arrangements for dealing with this scheme outside the moratorium.
O'Brien agreed that a thoughtful discussion of this issue is needed at the committee level, but he added there is also a need to have a moratorium put in place while the Municipal Operations Committee hashes out the issue.
A moratorium on commercial sturgeon fishing, the use of quotas for 2010-2011 and the determination of fishing quotas for 2012 are the main topics of the meeting of the five littoral states of Iran, Russia, Kazakhstan, Turkmenistan and Azerbaijan in Baku.
Summary: An Israeli settlement watchdog said on Monday that construction could start on thousands of new homes this month if Israel does not extend a moratorium.
The Obama administration issued a revised moratorium on deepwater oil drilling but will likely face another tough legal battle with the companies which have so far successfully sued to get the original drilling suspension lifted.