518 U.S. 839116 S.Ct. 2432135 L.Ed.2d 964
UNITED STATESv.WINSTAR CORP. et al.Certiorari to the United States Court of Appeals for the Federal Circuit.
No. 95-865.
Supreme Court of the United States
Argued April 24, 1996
Decided July 1, 1996

Syllabus
Realizing that the Federal Savings and Loan Insurance Corporation   (FSLIC) lacked the funds to liquidate all of the failing thrifts during  the savings and loan crisis of the 1980's, the Federal Home Loan Bank  Board encouraged healthy thrifts and outside investors to take over  ailing thrifts in a series of "supervisory mergers."  As inducement, the  Bank Board  agreed to permit acquiring entities to designate the excess  of the purchase price over the fair value of identifiable assets as  an intangible asset referred to as supervisory goodwill, and to count such  goodwill and certain capital credits toward the capital reserve  requirements imposed by federal regulations. Congress's subsequent  passage of the Financial Institutions Reform, Recovery, and Enforcement  Act of 1989 (FIRREA) forbade thrifts from counting goodwill and capital  credits in computing the required reserves.  Respondents are three  thrifts created by way of supervisory mergers.  Two of them were seized  and liquidated by federal regulators for failure to meet FIRREA's capital requirements, and the third avoided seizure through a private  recapitalization.  Believing that the Bank Board and FSLIC had promised  that they could count supervisory goodwill toward regulatory capital  requirements, respondents each filed suit against the United States in  the Court of Federal Claims, seeking damages for, inter alia, breach of  contract.  In granting each respondent summary judgment, the court held  that the 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, see Bowen v. Public Agencies Opposed to Social Security  Entrapment, 477 U. S. 41, 52-and its ``sovereign act defense-that a  ``public and general'' sovereign act, such as FIRREA's alteration of  capital reserve requirements, could not trigger contractual liability,  see Horowitz v. United States, 267 U. S. 458, 461.  The cases were  consolidated, and the en banc Federal Circuit ultimately affirmed.
Held:  The judgment is affirmed, and the case is remanded. 64 F. 3d  1531, affirmed and remanded.
Justice Souter, joined by Justice Stevens, Justice O'Connor, and Justice  Breyer, concluded in Parts II, III, IV, and IV-C, that the United States  is liable to respondents for breach of contract.  Pp. 19-57; 66-72.


1
(a) There is no reason to question the Federal Circuit's conclusion that  the Government had express contractual obligations to permit respondents  to use goodwill and capital credits in computing their regulatory  capital reserves. When the law as to capital requirements changed, the  Government was unable to perform its promises and became liable for  breach under ordinary contract principles.  Pp. 19-30.


2
(b) The unmistakability doctrine is not implicated here because  enforcement of the contractual obligation alleged would not block the  Government's exercise of a sovereign power.  The courts below did not  construe these contracts as binding the Government's exercise of  authority to modify its regulation of thrifts, and there has been no  demonstration that awarding damages for breach would be tantamount to  such a limitation. They read the contracts as solely risk-shifting  agreements, and respondents seek nothing more than the benefit of  promises by the Government to insure them against any losses arising  from future regulatory change.  Applying the unmistakability doctrine  to such contracts would not only represent a conceptual expansion of the  doctrine beyond its historical and practical warrant, but would  compromise the Government's practical capacity to make contracts, which  is "of the essence of sovereignty" itself, United States v. Bekins, 304  U. S. 27, 51-52.  Pp. 31-48.


3
(c) The answer to the Government's unmistakability argument also meets its two related ultra vires contentions: that, under the reserved powers  doctrine, Congress's power to change the law in the future was an  essential attribute of its sovereignty that the Bank Board and FSLIC had  no authority to bargain away; and that in any event no such authority  can be conferred without an express delegation to that effect.   A  contract to adjust the risk of subsequent legislative change does not  strip the Government of its legislative sovereignty, and the contracts  did not surrender the Government's sovereign power to regulate.  And there is no serious question that FSLIC (and the Bank Board acting through it) lacked authority to guarantee respondents against losses  arising from subsequent regulatory changes.  Pp.  49-52.


4
(d) The facts of this case do not warrant application of the sovereign  act doctrine.  That doctrine balances the Government's need for freedom  to legislate with its obligation to honor its contracts by asking  whether the sovereign act is properly attributable to the Government as  contractor.  If the answer is no, the Government's defense to liability  depends on whether that act would otherwise release the Government from  liability under ordinary contract principles.  Pp. 52-57.


5
(e) Even if FIRREA were to qualify as a "public and general" act, the  sovereign act doctrine cannot excuse the Government's breach here. Since  the object of the doctrine is to place the Government as contractor on  par with a private contractor in the same circumstances, Horowitz v.  United States, 267 U. S., at 461, the Government, like any other  defending party in a contract action, must show that passage of the  statute rendering its performance impossible was an event contrary to  the basic assumptions on which the parties agreed, and, ultimately, that the language or circumstances do not indicate that the Government should  be liable in any case.  The Government has not satisfied these  conditions.  There is no doubt that some changes in the regulatory  structure governing thrift capital reserves were both foreseeable and  likely when the parties contracted with the Government.  In addition,  any governmental contract that not only deals with regulatory change but  allocates the risk of its occurring will, by definition, fail the  further condition of a successful impossibility defense, for it will  indeed indicate that the parties' agreement was not meant to be rendered  nugatory by a change in the regulatory law.  That the Bank Board  and FSLIC could not themselves preclude Congress from changing the regulatory rules does not stand in the way of concluding that those  agencies assumed the risk of such change, for determining the  consequences of legal change was the point of the agreements. Pp.  66-72.


6
Justice Souter, joined by Justice Stevens and Justice Breyer, concluded  in Parts IV-A and IV-B, that, since the Government should not be excused  by legislation when the substantial effect of regulation was to help  itself out of improvident agreements, it is impossible to attribute the  exculpatory "public and general" character to FIRREA.  That statute not  only had the purpose of eliminating the very accounting "gimmicks" that  acquiring thrifts had been promised, but the congressional debates  indicate Congress's expectation, which there is no reason to question,  that FIRREA would have a substantial effect on the Government's  contractual obligations. The evidence of Congress's intense concern  with contracts like those at issue is not neutralized by the fact that  FIRREA did not formally target particular transactions or by FIRREA's  broad purpose to advance the general welfare.   Pp. 58-65.


7
Justice Scalia, joined by Justice Kennedy and Justice Thomas, agreed  that the Government was contractually obligated to afford respondents  favorable accounting treatment, and violated its obligations when it  discontinued that treatment under FIRREA. The Government's sovereign  defenses cannot be avoided by characterizing its obligations as not  entailing a limitation on the exercise of sovereign power; that  approach, although adopted by the plurality, is novel and fails to  acknowledge that virtually every contract regarding future conduct  operates as an assumption of liability in the event of nonperformance. Accordingly, it is necessary to address the Government's various sovereign defenses, particularly its invocation of the ``unmistakability'' doctrine.  That doctrine simply embodies the commonsense presumption that governments do  not ordinarily agree to  curtail their sovereign or legislative powers.  Respondents have  overcome that presumption here in establishing that the Government  promised, in unmistakable terms, to regulate them in a particular  fashion, into the future.  The Government's remaining arguments are  readily rejected.  The ``reserved powers'' doctrine cannot defeat a  claim to recover damages for breach of contract where subsequent  legislation has sought to minimize monetary risks assumed by the  Government.  The ``express delegation'' doctrine is satisfied here by  the statutes authorizing the relevant federal bank regulatory agencies  to enter into the agreements at issue.  Finally, the ``sovereign acts''  doctrine adds little, if anything, to the ``unmistakability'' doctrine, and cannot be relied upon where the Government has attempted to abrogate  the essential bargain of the contract.  Pp. 1-6.


8
Souter, J., announced the judgment of the Court and delivered an  opinion, in which Stevens and Breyer, JJ., joined, and in which  O'Connor, J., joined except as to Parts IV-A and IV-B. Breyer, J.,  filed a concurring opinion.  Scalia, J., filed an opinion concurring in  the judgment, in which Kennedy and Thomas, JJ., joined.  Rehnquist, C.  J., filed a dissenting opinion, in which Ginsburg, J., joined as to  Parts I, III, and IV.


9
NOTICE: This opinion is subject to formal revision before publication in  the preliminary print of the United States Reports.  Readers are  requested to notify the Reporter of Decisions, Supreme Court of the  United States, Washington, D.C. 20543, of any typographical or other  formal errors, in order that corrections may be made before the  preliminary print goes to press.


10
Justice Souter announced the judgment of the Court and delivered  an opinion, in which Justice Stevens and Justice Breyer join, and in  which Justice O'Connor joins except as to Parts IV-A and IV-B.


11
The issue in this case is the enforceability of contracts between the Government and participants in a regulated industry, to  accord them particular regulatory treatment in exchange for their  assumption of liabilities that threatened to produce claims against the  Government as insurer.  Although Congress subsequently changed the  relevant law, and thereby barred the Government from specifically  honoring its agreements, we hold that the terms assigning the risk of  regulatory change to the Government are enforceable, and that the  Government is therefore liable in damages for breach.

I.

12
We said in Fahey v. Mallonee, 332 U. S. 245, 250 (1947), that "[b]anking is one of the longest regulated and most closely supervised  of public callings."  That is particularly true of the savings and loan,  or "thrift," industry, which has been described as "a  federally-conceived and assisted system to provide citizens with  affordable housing funds."  H. R. Rep. No. 101-54, pt. 1, p. 292 (1989).  Because the contracts at issue in  today's case arise out of the  National Government's efforts over the last decade and a half to  preserve that system from collapse, we begin with an overview of the  history of federal savings and loan regulation.

A.

13
The modern savings and loan industry traces its origins to the  Great Depression, which brought default on 40 percent of the Nation's  $20 billion in home mortgages and the failure of some 1700 of the  nation's approximately 12,000 savings institutions. House Report, at  292-293.  In the course of the debacle, Congress passed three statutes  meant to stabilize the thrift industry. The Federal Home Loan Bank Act  created the Federal Home Loan Bank Board (Bank Board), which was  authorized to channel funds to thrifts for loans on houses and for  preventing foreclosures on them.  Ch. 522, 47 Stat. 725 (1932) (codified  as amended at 12 U. S. C. Section(s) 1421-1449 (1988 ed.)); see also House Report, at 292.  Next, the Home Owners' Loan Act of 1933 authorized the Bank Board to charter and regulate federal savings and  loan associations.  Ch. 64, 48 Stat. 128 (1933) (codified as amended at  12 U. S. C. Section(s) 1461-1468 (1988 ed.)). Finally, the National  Housing Act created the Federal Savings and Loan Insurance Corporation   (FSLIC), under the Bank Board's authority, with responsibility to insure  thrift deposits and regulate all federally insured thrifts. Ch. 847, 48  Stat. 1246 (1934) (codified as amended at 12 U. S. C. Section(s)  1701-1750g (1988 ed.)).


14
The resulting regulatory regime worked reasonably well until the  combination of high interest rates and inflation in the late 1970's and  early 1980's brought about a second crisis in the thrift industry.  Many  thrifts found themselves holding long-term, fixed-rate mortgages created  when interest rates were low; when market rates rose, those institutions  had to raise the rates they paid to depositors in order to attract  funds.  See House Report, at 294-295.  When the costs of short-term  deposits overtook the revenues from long-term mortgages, some 435  thrifts failed between 1981 and 1983.  House Report, at 296; see also General Accounting Office, Thrift Industry: Forbearance for Troubled  Institutions 1982-1986, p. 9 (May 1987) (GAO, Forbearance for Troubled  Institutions) (describing the origins of the crisis).


15
The first federal response to the rising tide of thrift failures  was "extensive deregulation," including "a rapid expansion in the scope  of permissible thrift investment powers and a similar expansion in a  thrift's ability to compete for funds with other financial services  providers." House Report, at 291; see also id., at 295-297; Breeden,  Thumbs on the Scale: The Role that Accounting Practices Played in the  Savings and Loan Crisis, 59 Fordham L. Rev. S71, S72-S74 (1991)  (describing legislation permitting nonresidential real estate lending by thrifts and deregulating interest rates paid to thrift depositors).1  Along with this deregulation came moves to weaken the requirement that  thrifts maintain adequate capital reserves as a cushion against losses,  see 12 CFR Section(s) 563.13 (1981), a requirement that one commentator  described as "the most powerful source of discipline for financial  institutions." Breeden, supra, at S75.  The result was a drop in capital reserves required by the Bank Board from five to four percent of assets  in November 1980, see 45 Fed. Reg. 76111, and to three percent in  January of 1982, see 47 Fed. Reg. 3543; at the same time, the Board  developed new "regulatory accounting principles" (RAP) that in many  instances replaced generally accepted accounting principles (GAAP) for  purposes of determining compliance with its capital requirements.2   According to the House Banking Committee, "[t]he use of various  accounting gimmicks and reduced capital standards masked the worsening financial condition of the industry, and the FSLIC, and enabled many  weak institutions to continue operating with an increasingly inadequate  cushion to absorb future losses." House  Report, at 298.  The reductions  in required capital reserves, moreover, allowed thrifts to grow  explosively without increasing their capital base, at the same time  deregulation let them expand into new (and often riskier) fields of  investment.  See Note, Causes of the Savings and Loan Debacle, 59  Fordham L. Rev. S301, S311 (1991); Breeden, supra, at S74-S75.


16
While the regulators tried to mitigate the squeeze on the thrift  industry generally through deregulation, the multitude of already-failed  savings and loans confronted FSLIC with deposit insurance liabilities  that threatened to exhaust its insurance fund.  See Olympic Federal  Savings and Loan Assn. v. Director, Office of Thrift Supervision, 732 F.  Supp. 1183, 1185 (DC 1990). According to the General Accounting Office,  FSLIC's total reserves declined from $6.46 billion in 1980 to $4.55  billion in 1985, GAO, Forbearance for Troubled Institutions 12, when the Bank Board estimated that it would take $15.8 billion to close all institutions deemed insolvent under generally accepted accounting principles.  General Accounting Office, Troubled Financial Institutions:  Solutions to the Thrift Industry Problem 108 (Feb. 1989) (GAO, Solutions  to the Thrift Industry Problem).  By 1988, the year of the last  transaction involved in this case, FSLIC was itself insolvent by over  $50 billion.  House Report, at 304.  And by early 1989, the GAO  estimated that $85 billion would be needed to cover FSLIC's  responsibilities and put it back on the road to fiscal health.  GAO,  Solutions to the Thrift Industry Problem 43. In the end, we now know,  the cost was much more even than that. See, e.g., Horowitz, The  Continuing Thrift Bailout, Investor's Business Daily, Feb. 1, 1996, p.  A1 (reporting an estimated $140 billion total public cost of the S&L  crisis through 1995).


17
Realizing that FSLIC lacked the funds to liquidate all of the failing thrifts, the Bank Board chose to avoid the insurance liability  by encouraging healthy thrifts and outside investors to take over ailing  institutions in a series of "supervisory mergers."  See GAO, Solutions  to the Thrift Industry Problem 52; L. White, The S&L Debacle: Public  Policy Lessons for Bank and Thrift Regulation 157 (1991) (White).3  Such transactions, in which the acquiring parties assumed the  obligations of thrifts with liabilities that far outstripped their  assets, were not intrinsically attractive to healthy institutions; nor  did FSLIC have sufficient cash to promote such acquisitions through  direct subsidies alone, although cash contributions from FSLIC were often part of a transaction.  See M. Lowy, High Rollers: Inside the  Savings and Loan Debacle 37 (1991) (Lowy).  Instead, the principal  inducement for these supervisory mergers was an understanding that the  acquisitions would be subject to a particular accounting treatment that  would help the acquiring institutions meet their reserve capital  requirements imposed by federal regulations.  See Investigation of  Lincoln Savings & Loan Assn.: Hearing Before the House Committee on  Banking, Finance, and Urban Affairs, 101st Cong., 1st Sess., pt. 5, p.  447 (1989) (testimony of M. Danny Wall, Director, Office of Thrift Supervision) (noting that acquirers of failing thrifts were allowed to  use certain accounting methods "in lieu of [direct] federal financial  assistance").

B.

18
Under Generally Accepted Accounting Principles (GAAP) there are  circumstances in which a business combination may be dealt with by the  "purchase method" of accounting.  See generally R. Kay & D. Searfoss,  Handbook of Accounting and Auditing 23-21 to 23-40 (2d ed. 1989)  (describing the purchase method); Accounting Principles Board Opinion  No. 16 (1970) (establishing rules as to what method must be applied to  particular transactions).  The critical aspect of that method for our  purposes is that it permits the acquiring entity to designate the excess  of the purchase price over the fair value of all identifiable assets acquired as an intangible asset called "goodwill."  Id., Para(s) 11, p.  284; Kay & Searfoss, supra, at 23-38.4  In the ordinary case, the  recognition of goodwill as an asset makes sense: a rational purchaser in  a free market, after all, would not pay a price for a business in excess  of the value of that business's assets unless there actually were some  intangible "going concern" value that made up the difference.  See Lowy  39.5  For that reason, the purchase method is frequently used to  account for acquisitions, see A. Phillips, J. Butler, G. Thompson, & R. Whitman, Basic Accounting for Lawyers 121 (4th ed. 1988), and GAAP expressly contemplated its application to at least some transactions  involving savings and loans.  See Financial Accounting Standards Board  Interpretation No. 9 (1976).  Goodwill recognized under the purchase  method as the result of an FSLIC-sponsored supervisory merger was  generally referred to as "supervisory goodwill." Recognition of goodwill  under the purchase method was essential to supervisory merger  transactions of the type at issue in this case. Because FSLIC had  insufficient funds to make up the difference between a failed thrift's liabilities and assets, the Bank Board had to offer a "cash substitute"  to induce a healthy thrift to assume a failed thrift's obligations.  Former Bank Board Chairman Richard Pratt put it this way in testifying  before Congress:


19
"The Bank Board . . . . did not have sufficient resources to      close all insolvent institutions, [but] at the same time, it      had to  consolidate the industry, move weaker institutions      into stronger hands,  and do everything possible to minimize      losses during the transition  period. Goodwill was an      indispensable tool in performing this task."  Savings and      Loan Policies in the Late 1970's and 1980's: Hearings Before      the House Committee on Banking, Finance, and Urban Affairs,      101st Cong.,  2d Sess., No. 101-176, p. 227 (1990).6


20
Supervisory goodwill was attractive to healthy thrifts for at least two reasons.  First, thrift regulators let the acquiring institutions count supervisory goodwill toward their reserve requirements under 12 CFR Section(s) 563.13 (1981).  This treatment was,  of course, critical to make the transaction possible in the first place,  because in most cases the institution resulting from the transaction  would immediately have been insolvent under federal standards if  goodwill had not counted toward regulatory net worth.  From the  acquiring thrift's perspective, however, the treatment of supervisory  goodwill as regulatory capital was attractive because it inflated the institution's reserves, thereby allowing the thrift to leverage more  loans (and, it hoped, make more profits).  See White 84; cf. Breeden, 59  Fordham L. Rev., at S75-S76 (explaining how loosening reserve  requirements permits asset expansion).


21
A second and more complicated incentive arose from the decision  by regulators to let acquiring institutions amortize the goodwill asset  over long periods, up to the forty-year maximum permitted by GAAP, see  Accounting Principles Board Opinion No. 17, Para(s) 29, p. 340 (1970).  Amortization recognizes that intangible assets such as goodwill are  useful for just so long; accordingly, a business must "write down" the   value of the asset each year to reflect its waning worth.  See Kay &  Searfoss, supra, at 15-36 to 15-37; Accounting Principles  Board Opinion No. 17, supra, Para(s) 27, at 339-340.7  The amount of the write down  is reflected on the business's income statement each year as an  operating expense.  See generally E. Faris, Accounting and Law in a  Nutshell Section(s) 12.2(q) (1984) (describing amortization of  goodwill).  At the same time  that it amortizes its goodwill asset,  however, an acquiring thrift must also account for changes in the value  of its loans,  which are its principal assets.  The loans acquired as  assets of the failed thrift in a supervisory merger were generally worth  less than their face value, typically because they were issued at  interest rates below the market rate at the time of the acquisition.  See Black, Ending Our Forebearers' Forbearances: FIRREA and Supervisory  Goodwill, 2 Stan. L. & Policy Rev. 102, 104-105 (1990).  This  differential or "discount," J. Rosenberg, Dictionary of Banking and  Financial Services 233 (2d ed. 1985), appears on the balance sheet as a  "contra-asset" account, or a deduction from the loan's face value to  reflect market valuation of the asset, R. Estes, Dictionary of  Accounting 29 (1981). Because loans are ultimately repaid at face  value, the magnitude of the discount declines over time as redemption  approaches; this process, technically called "accretion of discount," is  reflected on a thrift's income statement as a series of capital gains.  See Rosenberg, supra, at 9; Estes, supra, at 39-40.


22
The advantage in all this to an acquiring thrift depends upon the fact that accretion of discount is the mirror image of amortization  of goodwill.  In the typical case, a failed thrift's primary assets were  long-term mortgage loans that earned low rates of interest and therefore  had declined in value to the point that the thrift's assets no longer  exceeded its liabilities to depositors.  In such a case, the disparity  between assets and liabilities from which the accounting goodwill was  derived was virtually equal to the value of the discount from face value  of the thrift's outstanding loans.  See Black, 2 Stan. L. & Policy Rev.,  at 104-105.  Thrift regulators, however, typically agreed to supervisory  merger terms that allowed acquiring thrifts to accrete the discount over  the average life  of the loans (approximately seven years), see id., at  105, while permitting amortization of the goodwill asset over a much  longer period. Given that goodwill and discount were substantially  equal in overall values, the more rapid accrual of capital gain from accretion resulted in a net paper profit over the initial years following the acquisition.  See ibid.;  Lowy 39-40.8  The difference  between amortization and accretion schedules thus allowed acquiring  thrifts to seem more profitable than they in fact were.


23
Some transactions included yet a further inducement, described  as a "capital credit."  Such credits arose when FSLIC itself contributed  cash to further a supervisory merger and permitted the acquiring  institution to count the FSLIC contribution as a permanent credit to  regulatory capital.  By failing to require the thrift to subtract this  FSLIC contribution from the amount of supervisory goodwill generated by  the merger, regulators effectively permitted double counting of the cash  as both a tangible and an intangible asset.  See, e.g., Transohio Savings Bank v. Director, Office of Thrift Supervision, 967 F. 2d 598,  604 (CADC 1992).  Capital credits thus inflated the acquiring thrift's  regulatory capital and permitted leveraging of more and more loans.


24
As we describe in more detail below, the accounting treatment to  be accorded supervisory goodwill and capital credits was the subject of  express arrangements between the regulators and the acquiring  institutions.  While the extent to  which these arrangements constituted  a departure from prior norms is less clear, an acquiring institution  would reasonably have wanted to bargain for such treatment.  Although  GAAP demonstrably permitted the use of the purchase method in acquiring  a thrift suffering no distress, the relevant thrift regulations did not  explicitly state that intangible goodwill assets created by that method could be counted toward regulatory capital.  See 12 CFR Section(s) 563.13(a)(3) (1981) (permitting  thrifts to count as reserves any "items  listed in the definition of net worth"); 12 CFR Section(s) 561.13 (1981)  (defining "net worth" as "the sum of all reserve accounts . . .,  retained earnings, permanent stock, mutual capital certificates . . .,  and any other nonwithdrawable accounts of an insured institution").9   Indeed, the rationale for recognizing goodwill  stands on its head in a  supervisory merger: ordinarily, goodwill is recognized as valuable  because a rational purchaser would not pay more than assets are worth;  here, however, the purchase is rational only because of the accounting treatment for the shortfall.  See Black, supra, at 104 ("GAAP's treatment of goodwill . . . assumes that buyers do not overpay when they  purchase an S&L").  In the end, of course, such reasoning circumvented  the whole purpose of the reserve requirements, which was to protect  depositors and the deposit insurance fund.  As some in Congress later  recognized, "[g]oodwill is not cash.   It is a concept, and a shadowy one  at that.  When the Federal Government liquidates a failed thrift, goodwill is simply no good.  It is valueless.  That means, quite simply,  that the taxpayer picks up the tab for the shortfall." 135 Cong. Rec.  11795 (1989) (Rep. Barnard); see also White 84 (acknowledging that in  some instances supervisory goodwill "involved the creation of an asset  that did not have real value as protection for the FSLIC").  To those  with the basic foresight to appreciate all this, then, it was not  obvious that regulators would accept purchase accounting in determining  compliance with  regulatory criteria, and it was clearly prudent to get  agreement on the matter.


25
The advantageous treatment of amortization schedules and capital  credits in supervisory mergers amounted to more clear-cut departures  from GAAP and, hence, subjects worthy of agreement by those banking on  such treatment.  In 1983, the Financial Accounting Standards Board (the  font of GAAP) promulgated Statement of Financial Accounting Standards  No. 72,  which applied specifically to the acquisition of a savings and  loan association.  SFAS 72 provided that "[i]f, and to the extent that, the fair value of liabilities assumed exceeds the fair value of identifiable assets acquired in the acquisition of a banking or thrift  institution, the unidentifiable intangible asset recognized generally  shall be amortized to expense by the interest method over a period no  longer than the discount on the long-term interest-bearing assets  acquired is to be recognized as interest income."  Accounting Standards,  Original Pronouncements (July 1973-June 1, 1989), p. 725.  In other  words, SFAS 72 eliminated any doubt that the differential amortization  periods on which acquiring thrifts relied to produce paper profits in supervisory mergers were inconsistent with GAAP.  SFAS 72 also barred  double-counting of capital credits by requiring that financial  assistance from regulatory authorities must be deducted from the cost of  the acquisition before the amount of goodwill is determined.  SFAS 72,  Para(s) 9.10  Thrift acquirers relying on such credits, then, had  every  reason for concern as to the continued availability of the RAP in  effect at the time of these transactions.

C.

26
Although the results of the forbearance policy, including the departures from GAAP, appear to have been mixed, see GAO, Forbearance  for Troubled Institutions 4, it is relatively clear that the overall  regulatory response of the early and mid-1980's was unsuccessful in  resolving the crisis in the thrift industry. See, e.g., Transohio Savings Bank, 967 F. 2d, at 602 (concluding that regulatory measures  "actually aggravat[ed] the decline"). As a result, Congress enacted the  Financial Institutions Reform, Recovery, and Enforcement Act of 1989   (FIRREA), Pub. L. 101-73, 103 Stat. 183, with the objects of preventing  the collapse of the industry, attacking the root causes of the crisis,  and restoring public confidence.


27
FIRREA made enormous changes in the structure of federal thrift  regulation by (1) abolishing FSLIC and transferring its functions to  other agencies; (2) creating a new thrift deposit insurance fund under  the Federal Deposit Insurance Corporation (FDIC); (3) replacing the Bank  Board with the Office of Thrift Supervision (OTS), a Treasury Department  office with responsibility for the regulation of all federally insured savings associations; and (4) establishing the Resolution Trust Corporation (RTC) to liquidate or otherwise dispose of certain closed  thrifts and their assets.  See note following 12 U. S. C. Section(s)  1437, Section(s) 1441a, 1821.  More importantly for the present case,  FIRREA also obligated OTS to "prescribe and maintain uniformly  applicable capital standards for savings associations" in accord with  strict statutory requirements.  12 U. S. C. Section(s)  1464(t)(1)(A).11  In particular, the statute required thrifts to  "maintain core capital in an amount not less than 3 percent of the  savings association's total assets," 12 U. S. C. Section(s)  1464(t)(2)(A), and defined "core capital" to exclude "unidentifiable  intangible assets," 12 U. S. C. Section(s) 1464(t)(9)(A), such as  goodwill. Although the reform provided a "transition rule" permitting  thrifts to count "qualifying supervisory goodwill" toward half the core  capital requirement, this allowance was phased out by 1995.  12 U. S. C. Section(s) 1464(t)(3)(A).  According to the House Report, these tougher  capital requirements reflected a congressional judgment that "[t]o a  considerable extent, the size of the thrift crisis resulted from the  utilization of capital gimmicks that masked the inadequate  capitalization of thrifts." House Report, at 310.


28
The impact of FIRREA's new capital requirements upon institutions that had acquired failed thrifts in exchange for supervisory goodwill was swift and severe.  OTS promptly issued regulations implementing the new capital standards along with a bulletin  noting that FIRREA "eliminates [capital and accounting] forbearances"  previously granted to certain thrifts.  Office of Thrift Supervision,  Capital Adequacy: Guidance on the Status of Capital and Accounting  Forbearances and Capital Instruments held by a Deposit Insurance Fund,  Thrift Bulletin No. 38-2, Jan. 9, 1990.  OTS accordingly directed that  "[a]ll savings associations presently operating with these forbearances  . . .  should eliminate them in determining whether or not they comply  with the new minimum regulatory capital standards."  Ibid.  Despite the statute's limited exception intended to moderate transitional pains,  many institutions immediately fell out of compliance with regulatory  capital requirements, making them subject to seizure by thrift  regulators.  See Black, 2 Stan. L. & Policy Rev., at 107 ("FIRREA's new  capital mandates have caused over 500 S&Ls . . . to report that they  have failed one or more of the three capital requirements").

D.

29
This case is about the impact of FIRREA's tightened capital requirements on three thrift institutions created by way of supervisory  mergers.  Respondents Glendale Federal Bank, FSB, Winstar Corporation,  and The Statesman Group, Inc. acquired failed thrifts in 1981, 1984, and  1988, respectively.  After the passage of FIRREA, federal regulators  seized and liquidated the Winstar and Statesman thrifts for failure to  meet the new capital requirements.  Although the Glendale thrift also  fell out of regulatory capital compliance as a result of the new rules,  it managed to avoid seizure through a massive private recapitalization.  Believing that the Bank Board and FSLIC had promised them that the  supervisory goodwill created in their merger transactions could be  counted toward regulatory capital requirements, respondents each filed  suit against the United States in the Court of Federal Claims, seeking  monetary damages on both contractual and constitutional theories.  That  court granted respondents' motions for partial summary judgment on contract liability, finding in each case that the Government had breached contractual obligations to permit respondents to count supervisory goodwill and capital credits toward their regulatory capital  requirements.  See Winstar Corp. v. United States, 21 Cl. Ct. 112 (1990)  (Winstar I) (finding an implied-in-fact contract but requesting further  briefing on contract issues); 25 Cl. Ct. 541 (1992) (Winstar II)  (finding contract breached and entering summary judgment on liability);  Statesman Savings Holding Corp. v. United States, 26 Cl. Ct. 904 (1992)  (granting  summary judgment on liability to Statesman and Glendale).  In  so holding, the Court of Federal Claims rejected two central defenses asserted by the Government: that the Government could not be held to a  promise to refrain from exercising its regulatory authority in the  future unless that promise was unmistakably clear in the contract,  Winstar I, 21 Cl. Ct., at 116; Winstar II, 25 Cl. Ct., at 544-549;  Statesman, 26 Cl. Ct.,  at 919-920, and that the Government's alteration  of the capital  reserve requirements in FIRREA was a sovereign act that  could not trigger contractual liability, Winstar II, 25 Cl. Ct., at  550-553; Statesman, 26 Cl. Ct., at 915-916.  The Court of Federal Claims  consolidated the three cases and certified its decisions  for  interlocutory appeal.


30
A divided panel of the Federal Circuit reversed, holding that  the parties did not allocate to the Government, in an unmistakably clear  manner, the risk of a subsequent change in the regulatory capital  requirements.  Winstar Corp. v. United States, 994 F. 2d 797, 811-813   (1993).  The full court, however, vacated this decision and agreed to  rehear the case en  banc.  After rebriefing and reargument, the en banc  court reversed the panel decision and affirmed the Court of Federal  Claims' rulings on liability.  Winstar Corp. v. United States, 64 F. 3d  1531 (CA Fed. 1995) (en banc).  The Federal Circuit found  that FSLIC had made express contracts with respondents, including a promise that supervisory goodwill and capital credits could be counted toward satisfaction of the regulatory capital requirements.  Id., at 1540,  1542-1543.  The court rejected the Government's unmistakability  argument, agreeing with the Court of Federal Claims that that doctrine  had no application in a suit for money damages.  Id., at 1545-1548.  Finally, the en banc majority found that FIRREA's new capital  requirements "single[d] out supervisory goodwill for special treatment"  and therefore could not be said to be a "public" and  "general act"  within the meaning of the sovereign acts doctrine.  Id., at 1548-1551.  Judge Nies dissented, essentially repeating the arguments in her prior opinion for the panel majority, id.,  at 1551-1552, and Judge Lourie also  dissented on the ground that FIRREA was a public and general act, id.,  at 1552-1553.  We granted certiorari, 516 U. S. ___ (1996), and now  affirm.

II.

31
We took this case to consider the extent to which special rules,  not generally applicable to private contracts, govern enforcement of the  governmental contracts at issue here.  We decide whether the Government  may assert four special defenses to respondents' claims for breach: the  canon of contract construction that surrenders of sovereign authority  must appear in unmistakable terms, Bowen v. Public Agencies Opposed to  Social Security Entrapment, 477 U. S. 41, 52 (1986); the rule that an agent's authority to make such surrenders must be delegated in express  terms, Home Telephone & Telegraph Co. v. City of Los Angeles, 211 U. S.  265 (1908); the doctrine that a government may not, in any event,  contract to surrender certain  reserved powers, Stone v. Mississippi, 101  U. S. 814 (1880); and, finally, the principle that a Government's  sovereign acts do not give rise to a claim for breach of contract,  Horowitz v. United States, 267 U. S. 458, 460 (1925).


32
The anterior question of whether there were contracts at all between the Government and respondents dealing with regulatory treatment  of supervisory goodwill and capital credits, although briefed and argued  by the parties in this Court, is not strictly before us.  See Yee v.  Escondido, 503 U. S. 519, 535 (1992) (noting that "we ordinarily do not  consider questions outside those presented in the petition for  certiorari"); Sup. Ct. Rule 14.1(a).  And although we may review the  Court of Federal Claims' grant of summary judgment de novo, Eastman  Kodak Co. v. Image Technical Services, Inc., 504 U. S. 451, 465, n. 10   (1992), we are in no better position than the Federal Circuit and the  Court of Federal Claims to evaluate the documentary records  of the transactions at issue.  Our resolution of the legal issues raised by the  petition for certiorari, however, does require some consideration of the  nature of the underlying transactions.

A.

33
The Federal Circuit found that "[t]he three plaintiff thrifts negotiated contracts with the bank regulatory agencies that allowed them  to include supervisory goodwill (and capital credits) as assets for  regulatory capital purposes and to amortize that supervisory goodwill  over extended periods of time."  64 F. 3d, at 1545.  Although each of  these transactions was fundamentally similar, the relevant circumstances  and documents vary somewhat from case to case.

1.

34
In September 1981, Glendale was approached about a possible merger by the First Federal Savings and Loan Association of Broward  County, which then had liabilities exceeding the fair value of its  assets by over $734 million.  At the time, Glendale's accountants  estimated that FSLIC would have needed approximately $1.8 billion to  liquidate Broward, only about $1 billion of which could be recouped  through the sale of Broward's assets.  Glendale, on the other hand, was  both profitable and well capitalized, with a net worth of $277  million.12  After some preliminary negotiations with the regulators,  Glendale submitted a merger proposal to the Bank Board, which had to approve all mergers involving savings and loan associations, see 12 U.  S. C. Section(s) 1467a(e)(1)(A) and (B); 12 U. S. C. Section(s)  1817(j)(1); that proposal assumed the use of the purchase method of  accounting to record supervisory goodwill arising from the transaction,  with an amortization period of 40 years.  The Bank Board ratified the  merger, or "Supervisory Action Agreement" (SAA), on November 19, 1981.


35
The SAA itself said nothing about supervisory goodwill, but did  contain the following integration clause:


36
"This Agreement . . . constitutes the entire agreement      between  the parties thereto and supersedes all prior      agreements and  understandings of the parties in connection      herewith, excepting only the  Agreement of Merger and any      resolutions or letters issued  contemporaneously herewith."      App. 598-599.


37
The SAA thereby incorporated Bank Board Resolution No. 81-710,  by which the Board had ratified the SAA.  That Resolution referred to  two additional documents: a letter to be furnished by Glendale's  independent accountant identifying and supporting  the use of any  goodwill to be recorded on Glendale's books, as well as the resulting  amortization periods; and "a stipulation that any goodwill arising from  this transaction shall be determined and amortized in accordance with   [Bank Board] Memorandum R 31b." Id., at 607.  Memorandum R 31b,  finally, permitted Glendale to use the purchase method of accounting and   to recognize goodwill as an asset subject to amortization. See id., at  571-574.


38
The Government does not seriously contest this evidence that the  parties understood that goodwill arising from these transactions would  be treated as satisfying regulatory requirements; it insists, however,  that these documents simply reflect statements of then-current federal  regulatory policy rather than contractual undertakings.  Neither the  Court of Federal Claims nor the Federal Circuit so read the record, however, and we agree with those courts that the Government's interpretation of the relevant documents is fundamentally implausible.  The integration clause in Glendale's Supervisory Action Agreement (SAA)  with FSLIC, which is similar in all relevant respects to the analogous  provisions in the Winstar and Statesman contracts, provides that the SAA  supersedes "all prior agreements and understandings . . . excepting only  . . . any resolutions or letters issued contemporaneously" by the Board, id., at 598-599; in other words, the SAA characterizes the Board's  resolutions and letters not as statements of background rules, but as  part of the "agreements and understandings" between the parties.


39
To the extent that the integration clause leaves any ambiguity,  the other courts that construed the documents found that the realities  of the transaction favored reading those documents as contractual  commitments, not mere statements of policy, see Restatement (Second) of  Contracts Section(s) 202(1) (1981) ("Words and other conduct are  interpreted in the light of all the circumstances, and if the principal  purpose of the parties is ascertainable it is given great weight"), and  we see no reason to disagree.  As the Federal Circuit noted, "[i]t is not disputed that if supervisory goodwill had not been available for  purposes of meeting regulatory capital requirements, the merged thrift  would have been subject to regulatory noncompliance and penalties from  the moment of its creation."  64 F. 3d, at 1542.  Indeed, the assumption  of Broward's liabilities would have rendered Glendale immediately  insolvent by approximately $460 million, but for Glendale's right to  count goodwill as regulatory capital.  Although one can imagine cases in  which the potential gain might induce a party to assume a substantial  risk that the gain might be wiped out by a change in the law, it would  have been irrational in this case for Glendale to stake its very existence upon continuation of current policies without seeking to embody those policies in some sort of contractual commitment. This  conclusion is obvious from both the dollar amounts at stake and the  regulators' proven propensity to make changes in the relevant  requirements.  See Brief for United States 26 ("[I]n light of the  frequency with which federal capital requirements had changed in the  past . . ., it would have been unreasonable for Glendale, FSLIC, or the  Bank Board to expect or rely upon the fact that those requirements would  remain unchanged"); see also infra, at 68-69.  Under the circumstances,  we have no doubt that the parties intended to settle regulatory  treatment of these transactions as a condition of their agreement.  See,  e.g., The Binghamton Bridge, 3 Wall. 51, 78 (1866) (refusing to construe charter in such a way that it would have been "madness" for private  party to enter into it).13  We accordingly have no reason to question   the Court of Appeals's conclusion that "the government had an express  contractual obligation to permit Glendale to count the supervisory  goodwill generated as a result of its merger with Broward as a capital  asset for regulatory capital purposes." 64  F. 3d, at 1540.

2.

40
In 1983, FSLIC solicited bids for the acquisition of Windom Federal Savings and Loan Association, a Minnesota-based thrift in danger  of failing.  At that time, the estimated cost to the Government of  liquidating Windom was approximately $12 million. A group of private  investors formed Winstar Corporation for the purpose of acquiring Windom  and submitted a merger plan to FSLIC; it called for capital  contributions of $2.8 million from  Winstar and $5.6 million from FSLIC,  as well as for recognition  of supervisory goodwill to be amortized over  a period of 35 years.


41
The Bank Board accepted the Winstar proposal and made an Assistance Agreement that incorporated, by an integration clause much  like Glendale's, both the Board's resolution approving the merger and a  forbearance letter issued on the date of the agreement.  See App. 112.  The forbearance letter provided that "[f]or purposes of reporting to the  Board, the value of any intangible assets resulting from accounting for  the merger in accordance with the purchase method may be amortized by [Winstar] over a period not to exceed 35 years by the straight-line  method."  Id., at 123.  Moreover, the Assistance Agreement  itself  contained an "Accounting Principles" section with the following  provisions:


42
"Except as otherwise provided, any computations made for the      purposes of this Agreement shall be governed by generally      accepted  accounting principles as applied on a going concern      basis in the savings  and loan industry, except that where      such principles conflict with the  terms of this Agreement,      applicable regulations of the Bank Board or the   [FSLIC], or      any resolution or action of the Bank Board approving or      adopted concurrently with this Agreement, then this      Agreement, such  regulations, or such resolution or action      shall govern. . . .  If there  is a conflict between  such      regulations and the Bank Board's resolution  or action, the      Bank Board's resolution or action shall govern.  For      purposes of this section, the governing regulations and the      accounting  principles shall be those in effect on the      Effective Date or as  subsequently clarified, inter-preted,      or amended by the Bank Board or  the Financial Accounting      Standards Board ("FASB"), respectively, or any  successor      organization to either."  Id., at 108-109.


43
The Government emphasizes the last sentence of this clause, which provides that the relevant accounting principles may be "subsequently clarified . . . oramended," as barring any inference that  the Government assumed the risk of regulatory change.  Its argument,  however, ignores the preceding sentence providing that the Bank Board's  resolutions and actions in connection with the merger must prevail over  contrary regulations.  If anything, then, the accounting principles  clause tilts in favor of interpreting the contract to lock in the  then-current regulatory treatment of supervisory goodwill.


44
In any event, we do not doubt the soundness of the Federal Circuit's finding that the overall "documentation in the Winstar transaction establishes an express agreement allowing Winstar to proceed  with the merger plan approved by the Bank Board, including the recording  of supervisory goodwill as a capital asset for regulatory capital  purposes to be amortized over 35 years."  64 F. 3d, at 1544.  As in the  Glendale transaction, the circumstances of the merger powerfully support  this conclusion: The tangible net worth of the acquired institution was  a negative $6.7 million, and the new Winstar thrift would have been out  of compliance with regulatory capital standards from its very inception,  without including goodwill in the relevant calculations.  We thus accept  the Court of Appeals's conclusion that "it was the intention of the  parties to be bound by the accounting treatment for goodwill arising in  the merger."  Ibid.

3.

45
Statesman, another nonthrift entity, approached FSLIC in 1987 about acquiring a subsidiary of First Federated Savings Bank, an insolvent Florida thrift.  FSLIC responded that if Statesman wanted  government assistance in the acquisition it would have to acquire all of  First Federated as well as three shaky thrifts in Iowa.  Statesman and  FSLIC ultimately agreed on a complex plan for acquiring the four  thrifts; the agreement involved application of the purchase method of  accounting, a $21 million cash contribution from Statesman to be  accompanied by $60 million from FSLIC, and (unlike the Glendale and  Winstar plans) treatment of $26 million of FSLIC's contribution as a  permanent capital credit to Statesman's regulatory capital.


46
The Assistance Agreement between Statesman and FSLIC included an  "accounting principles" clause virtually identical to Winstar's, see  App. 402-403, as well as a specific provision  for the capital credit:


47
"For the purposes of reports to the Bank Board . . ., $26      million of the contribution [made by FSLIC] shall be credited      to   [Statesman's] regulatory capital account and shall      constitute regulatory  capital (as defined in Section(s)      561.13 of the Insurance Regulations)."  Id., at 362a.


48
As with Glendale and Winstar, the Agreement had an integration  clause incorporating contemporaneous resolutions and letters issued by  the Board.  Id., at 407-408.  The Board's Resolution explicitly  acknowledged both the capital credits and the creation of supervisory  goodwill to be amortized over 25 years, id., at 458-459, and the  Forbearance Letter likewise recognized the capital credit provided for  in the Agreement. Id., at 476.  Finally, the parties executed a separate Regulatory Capital Maintenance Agreement stating that, "[i]n consideration of the mutual promises contained [t]herein," id., at 418,  Statesman would be obligated to maintain the regulatory capital of the  acquired thrifts "at the level . . . required by Section(s) 563.13(b) of  the Insurance Regulations . . . or any successor regulation . . . ."  The agreement further provided, however, that "[f]or purposes of this  Agreement, any determination of [Statesman's] Required Regulatory  Capital . . . shall include . . . amounts permitted by the FSLIC in the Assistance Agreement and in the forbearances issued in connection with  the transactions discussed herein."  Id., at 418-419. Absent those  forbearances, Statesman's thrift would have remained insolvent by almost  $9 million despite the cash infusions provided by the parties to the  transaction.


49
For the same reasons set out above with respect to the Glendale  and Winstar transactions, we accept the Federal Circuit's conclusion  that "the government was contractually obligated to recognize the  capital credits and the supervisory goodwill generated by the merger as  part of the Statesman's regulatory capital requirement and to permit  such goodwill to be amortized on a straight line basis over 25 years."  64 F. 3d, at 1543.  Indeed, the Government's position is even weaker in Statesman's case because the capital credits portion of the agreement  contains an express commitment to include those credits in the  calculation of regulatory capital.  The Government asserts that the  reference to Section(s) 563.13 of FSLIC regulations, which at the time  defined regulatory capital  for thrift institutions, indicates that the  Government's obligations could change along with the relevant  regulations.  But, just as in Winstar's case, the Government would have  us overlook the specific incorporation of the then-current regulations  as part of the agreement.14  The Government also cites a provision requiring Statesman to "comply in all material respects with all applicable statutes, regulations, orders of, and restrictions imposed by  the United States or . . . by any agency of [the United States]," App.  407, but this simply meant  that Statesman was required to observe  FIRREA's new capital requirements once they were promulgated.  The  clause was hardly  necessary to oblige Statesman to obey the law, and  nothing in it barred Statesman from asserting that passage of that law  required the Government to take action itself or be in breach of  its contract.

B.

50
It is important to be clear about what these contracts did and  did not require of the Government.  Nothing in the documentation or the  circumstances of these transactions purported to bar the Government from  changing the way in which it regulated the thrift industry.  Rather,  what the Federal Circuit said of the Glendale transaction is true of the  Winstar  and Statesman deals as well: "the Bank Board and the FSLIC were contractually bound to recognize the supervisory goodwill and the amortization periods reflected" in the agreements between the parties.  64 F. 3d, at 1541-1542.  We read this promise as the law of contracts  has always treated promises to provide something beyond the promisor's  absolute control, that is, as a  promise to insure the promisee against  loss arising from the promised condition's nonoccurrence.15  Holmes's  example is famous:"[i]n the case of a binding promise that it shall rain  to-morrow, the immediate legal effect of what the promisor does is, that  he takes the risk of the event, within certain defined  limits, as between himself and the promisee."  Holmes, The Common Law (1881), in 3  The Collected Works of Justice Holmes 268 (S. Novick ed. 1995).16  Contracts like this are especially appropriate in the world of regulated  industries, where the risk that legal change will prevent the  bargained-for performance is  always lurking in the shadows.  The  drafters of the Restatement  attested to this when they explained that,  "[w]ith the trend toward greater governmental regulation . . . parties  are increasingly aware of such risks, and a party may undertake a duty  that is not discharged by such supervening governmental actions . . . ." Restatement (Second) of Contracts Section(s) 264, Comment a. "Such an  agreement," according to the Restatement, "is usually interpreted as one  to pay damages if performance is prevented rather than one to render a  performance in violation of law." Ibid.17


51
When the law as to capital requirements changed in the present  instance, the Government was unable to perform its promise and,  therefore, became liable for breach.  We accept the Federal Circuit's  conclusion that the Government breached these contracts when, pursuant  to the new regulatory capital requirements imposed by FIRREA, 12 U. S.  C. Section(s) 1464(t), the federal regulatory agencies limited the use  of supervisory goodwill and capital credits in calculating respondents'  net worth.  64 F. 3d, at 1545.  In the case of Winstar and Statesman, the Government exacerbated its breach when it seized and liquidated  respondents' thrifts for regulatory noncompliance. Ibid.


52
In evaluating the relevant documents and circumstances, we have,  of course, followed the Federal Circuit in applying ordinary principles  of contract construction and breach that would be applicable to any  contract action between private parties.  The Government's case,  however, is that the Federal Circuit's decision to apply ordinary  principles was error for a variety of reasons, each of which we  consider, and reject, in the sections ahead.

III.

53
The Government argues for reversal, first, on the principle that  "contracts that limit the government's future exercises of regulatory  authority are strongly disfavored; such contracts will be recognized  only rarely, and then only when the limitation on future regulatory  authority is expressed in unmistakable terms." Brief for United States  16.  Hence, the Government says, the agreements between the Bank Board,  FSLIC, and respondents should not be construed to waive Congress's  authority to enact a subsequent bar to using supervisory goodwill and  capital credits to meet regulatory capital requirements.


54
The argument mistakes the scope of the unmistakability doctrine.  The thrifts do not claim that the Bank Board and FSLIC purported to  bind Congress to ossify the law in conformity to the contracts; they  seek no injunction against application of FIRREA's new capital  requirements to them and no exemption from FIRREA's terms.  They simply  claim that the Government assumed the risk that subsequent changes in  the law might prevent it from performing, and agreed to pay damages in  the event that such failure to perform caused financial injury.  The  question,  then, is not whether Congress could be constrained but whether  the doctrine of unmistakability is applicable to any contract claim against the Government for breach occasioned by a subsequent act of  Congress.  The answer to this question is no.

A.

55
The unmistakability doctrine invoked by the Government was stated in Bowen v. Public Agencies Opposed to Social Security Entrapment: "`[S]overeign power . . . governs all contracts subject to  the sovereign's jurisdiction, and will remain intact unless surrendered  in unmistakable terms.'"  477 U. S., at 52 (quoting Merrion v. Jicarilla  Apache Tribe, 455 U. S. 130, 148 (1982)).  This doctrine marks the point  of intersection between two fundamental constitutional concepts, the one  traceable to the theory of parliamentary sovereignty made familiar by  Blackstone, the other to the theory that legislative power may be  limited, which became familiar to Americans through their experience  under the colonial charters, see G. Wood, The Creation of the American  Republic 1776-1787, pp. 268-271 (1969).


56
In his Commentaries, Blackstone stated the centuries-old concept  that one legislature  may not bind the legislative authority of its  successors:


57
"Acts of parliament derogatory from the power of subsequent      parliaments bind not. . . .  Because the legislature, being      in truth the  sovereign power, is always of equal, always of      absolute authority: it  acknowledges no superior upon earth,      which the prior legislature must  have been, if it's [sic]      ordinances could bind the present parliament."  1 W.      Blackstone, Commentaries on the Laws of England 90 (1765).18


58
In England, of course, Parliament was historically supreme in the sense that no "higher law" limited the scope of legislative action  or provided mechanisms for placing legally enforceable limits upon it in  specific instances; the power of American legislative bodies, by  contrast, is subject to the overriding dictates of the Constitution and  the obligations that it authorizes.  See Eule, Temporal Limits on the  Legislative Mandate: Entrenchment and Retroactivity, 1987 Am. Bar Found. Research J. 379, 392-393 (observing that the English rationale for precluding a legislature from binding its successors does not apply in  America).  Hence, although we have recognized that  "a general law . . .  may be repealed, amended or disregarded by  the legislature which enacted  it," and "is not binding upon any subsequent legislature," Manigault v.  Springs, 199 U. S. 473, 487 (1905),19 on this side of the Atlantic  the principle has always lived in some tension with the constitutionally  created potential for a legislature, under certain circumstances, to  place effective limits on its successors, or to authorize executive action resulting in such a limitation.


59
The development of this latter, American doctrine in federal litigation began in cases applying limits on state sovereignty imposed  by the National Constitution.  Thus Chief Justice Marshall's exposition  in Fletcher v. Peck, 6 Cranch 87 (1810), where the Court held that the  Contract Clause, U. S. Const., Art. I, Section(s) 10, cl. 1, barred the  State of Georgia's effort to rescind land grants made by a prior state  legislature.  Marshall acknowledged "that one legislature is competent  to repeal any act which a former legislature was competent to pass;  and  that one legislature cannot abridge the powers of a succeeding legislature."  Id., at 135.  "The correctness of this principle, so far  as respects general legislation," he said, "can never be controverted."  Ibid.  Marshall went on to qualify the principle, however, noting that  "if an act be done under a law, a succeeding legislature cannot undo it.  The past cannot be recalled by the most absolute power."  Ibid.  For  Marshall, this was true for the two distinct reasons that the intrusion  on vested rights by the Georgia legislature's act of repeal might well  have gone beyond the limits of "the legislative power," and that  Georgia's legislative sovereignty was limited by the Federal  Constitution's bar against laws impairing the obligation of contracts.  Id., at 135-136.


60
The impetus for the modern unmistakability doctrine was thus Chief Justice Marshall's application of the Contract Clause to public  contracts.  Although that Clause made it possible for state legislatures  to bind their successors by entering into contracts, it soon became  apparent that such contracts could become a threat to the sovereign  responsibilities of state governments.  Later decisions were accordingly  less willing to recognize contractual restraints upon legislative  freedom of action, and two distinct limitations developed to protect  state regulatory powers.  One came to be known as the "reserved powers" doctrine, which held that certain substantive powers of sovereignty  could not be contracted away.  See West River Bridge Co. v. Dix, 6 How.  507 (1848) (holding that a State's contracts do not surrender its  eminent domain power).20  The other, which surfaced somewhat earlier  in Providence Bank v. Billings, 4 Pet. 514 (1830), and Charles River  Bridge v. Warren Bridge, 11 Pet. 420 (1837), was a canon of construction  disfavoring implied governmental obligations in public contracts.  Under  this rule that "[a]ll public grants are strictly construed," The  Delaware Railroad Tax, 18 Wall. 206, 225 (1874), we have insisted that "[n]othing can be taken against the state by presumption or inference,"  ibid., and that "neither the right of taxation, nor any other power of  sovereignty, will be held . . . to have been surrendered, unless such  surrender has been expressed in terms too plain to be mistaken."  Jefferson Branch Bank v. Skelly, 1 Black 436, 446 (1862).


61
The posture of the Government in these early unmistakability cases is important.  In each, a state or local government entity had  made a contract granting a private party some concession (such as a tax  exemption or a monopoly), and a subsequent governmental action had  abrogated the contractual commitment.  In each case, the private party  was suing to invalidate the abrogating legislation under the Contract  Clause.  A requirement that the government's obligation unmistakably  appear thus served the dual purposes of limiting contractual incursions  on a State's sovereign powers and of avoiding difficult constitutional questions about the extent of State authority to limit the subsequent  exercise of legislative power.  Cf. Edward J. DeBartolo Corp. v. Florida  Gulf Coast Building & Constr. Trades Council, 485 U. S. 568, 575 (1988)  ("[W]here an otherwise acceptable construction of a statute would raise  serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the  intent of Congress"); Ashwander v. TVA, 297 U. S. 288, 348 (1936)  (Brandeis, J., concurring) (same).


62
The same function of constitutional avoidance has marked the expansion of the unmistakability doctrine from its Contract Clause origins dealing with state grants and contracts to those  of other governmental sovereigns, including the United States.   See Merrion v.  Jicarilla Apache Tribe, 455 U. S., at 148 (deriving the unmistakability  principle from St. Louis v. United Railways Co., 210 U. S. 266 (1908), a  Contract Clause suit against a state government).21  Although the  Contract Clause has no application to acts of the United States, Pension  Benefit Guaranty Corp. v. R. A. Gray & Co., 467 U. S. 717, 732, n. 9   (1984), it is clear that the National Government has some capacity to  make agreements binding future Congresses by creating vested rights,  see, e.g., Perry v. United states, 294 U. S. 330 (1935); Lynch v. United States, 292 U. S. 571 (1934).  The extent of that capacity, to be sure,  remains somewhat obscure.  Compare, e.g., United States Trust Co. of  N.Y. v. New  Jersey, 431 U. S. 1, 26 (1977) (heightened Contract Clause  scrutiny when States abrogate their own contractual obligations), with  Pension Benefit Guaranty Corp., supra, at 733 (contrasting  less exacting  due process standards governing federal economic legislation affecting private contracts).  But the want of more  developed law on limitations  independent of the Contract Clause  is in part the result of applying the  unmistakability canon of construction to avoid this doctrinal thicket,  as we have done in several cases involving alleged surrenders of  sovereign prerogatives by the National Government and Indian tribes.


63
First, we applied the doctrine to protect a tribal sovereign in  Merrion v. Jicarilla Apache Tribe, 455 U. S. 130 (1982), which held that  long-term oil and gas leases to private parties  from an Indian tribe,  providing for specific royalties to be paid to the tribe, did not limit  the tribe's sovereign prerogative to tax the proceeds from the lessees'  drilling activities.  Id., at 148. Because the lease made no reference  to the tribe's taxing power, we held simply that a waiver of that power  could not be "inferred . . . from silence," ibid., since the taxing  power of any government remains "unless it is has been specifically  surrendered in terms which admit of no other reasonable interpretation."  Ibid. (internal quotation marks and citation omitted).


64
In Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U. S. 41 (1986), this Court confronted a state claim  that Section(s) 103 of the Social Security Amendments Act of 1983, 97  Stat. 71, 42 U. S. C. Section(s) 418(g) (1982 ed., Supp. II), was  unenforceable to the extent it was inconsistent with the terms of a  prior agreement with the National Government. Under the law before  1983, a State could agree with the Secretary of Health and Human  Services to cover the State's  employees under the Social Security scheme  subject to a right to withdraw them from coverage later.  When the 1983  Act eliminated the right of withdrawal, the State of California and  related plaintiffs sought to enjoin application of the new law to them,   or to obtain just compensation for loss of the withdrawal right (a remedy which the District Court interpreted as tantamount to  the injunction, since it would mandate return of all otherwise required  contributions, see 477 U. S., at 51).  Although we were able to resolve  the case by reading the terms of a state-federal coverage agreement to  reserve the Government's right to modify its terms by subsequent  legislation, in the alternative we rested the decision on the more  general principle that, absent an "unmistakable" provision to the  contrary, "contractual arrangements, including those to which a  sovereign itself is a party, `remain subject to subsequent legislation'  by the sovereign." Id., at 52 (quoting Merrion, supra, at 147).  We thus rejected the proposal "to find that a `sovereign forever waives the  right to exercise one of its sovereign powers unless it expressly  reserves the right to exercise that power in' the contract," Bowen,  supra, at 52 (quoting Merrion, supra, at 148), and held instead that  unmistakability was needed for waiver, not reservation.


65
Most recently, in United States v. Cherokee Nation of Oklahoma,  480 U. S. 700 (1987), we refused to infer a waiver of federal sovereign  power from silence.  There, an Indian tribe with property rights in a  river bed derived from a government treaty sued for just compensation  for damage to its interests caused by the Government's navigational  improvements to the Arkansas river.  The claim for compensation  presupposed, and was understood to presuppose, that the Government had  conveyed to the tribe its easement to control navigation; absent that  conveyance, the tribe's property included no right to be free from the Government's river bed improvements.  Id., at 704.  We  found, however,  that the treaty said nothing about conveying the Government's  navigational easement, see id., at 706, which we saw as an aspect of  sovereignty.  This, we said, could be "`surrendered [only] in  unmistakable terms,'" id., at 707 (quoting Bowen, supra, at 52), if  indeed it could be waived at all.


66
Merrion, Bowen, and Cherokee Nation thus announce no new rule distinct from the canon of construction adopted in Providence Bank and  Charles River Bridge; their collective holding is that a contract with a  sovereign government will not  be read to include an unstated term  exempting the other contracting party from the application of a  subsequent sovereign act (including an act of Congress), nor will an  ambiguous term of a grant or contract be construed as a conveyance or  surrender of sovereign power.  The cases extending back into the  19th-century thus stand for a rule that applies when the Government is  subject either to a claim that its contract has surrendered a sovereign  power22 (e.g., to tax or control navigation), or to a  claim that  cannot be recognized without creating an exemption from the exercise of such a power (e.g., the equivalent of exemption from social security  obligations).  The application of the doctrine thus turns on whether  enforcement of the contractual obligation alleged would block the  exercise of a sovereign power of the Government.


67
Since the criterion looks to the effect of a contract's enforcement, the particular remedy sought is not dispositive and the  doctrine is not rendered inapplicable by a request for damages, as  distinct from specific performance.  The respondents in Cherokee Nation  sought nothing beyond damages, but the case still turned on the  unmistakability doctrine because there could be no claim to harm unless  the right to be free of the sovereign power to control navigation had  been conveyed away by the Government.23  So, too, in Bowen: the sole  relief sought was dollars and cents, but the award of damages as  requested would have been the equivalent of exemption from the terms of  the subsequent statute.


68
The application of the doctrine will therefore differ according  to the different kinds of obligations the Government may assume and the  consequences of enforcing them.  At one end of the wide spectrum are  claims for enforcement of contractual obligations that could not be  recognized without effectively limiting sovereign authority, such as a  claim for rebate under an agreement for a tax exemption.  Granting a  rebate, like enjoining enforcement, would simply block the exercise of  the taxing power, cf. Bowen, 477 U. S., at 51, and the unmistakability  doctrine would have to be satisfied.24  At the other end are  contracts, say, to buy food for the army; no sovereign power is limited  by the Government's promise to purchase and a claim for damages implies  no such limitation. That is why no one would seriously contend that  enforcement of humdrum supply contracts might be subject to the  unmistakability doctrine.  Between these extremes lies an enormous  variety of contracts including those under which performance will  require exercise (or not) of a power peculiar to the Government.  So  long as such a contract is reasonably construed to include a risk-shifting component that may be enforced without effectively barring  the exercise of that power, the enforcement of the risk allocation  raises nothing for the unmistakability doctrine to guard against, and  there is no reason to apply it.


69
The Government argues that enforcement of the contracts in this  case would implicate the unmistakability principle, with the consequence  that Merrion, Bowen, and Cherokee Nation are good authorities for  rejecting respondents' claims.  The Government's position is mistaken,  however, for the complementary reasons that the contracts have not been  construed as binding the Government's exercise of authority to modify  banking regulation or of any other sovereign power, and there has been  no demonstration that awarding damages for breach would be  tantamount to  any such limitation.


70
As construed by each of the courts that considered these contracts before they reached us, the agreements do not purport to bind  the Congress from enacting regulatory measures, and respondents do not  ask the courts to infer from silence any such limit on sovereign power  as would violate the holdings of Merrion and Cherokee Nation.  The  contracts have been read as solely risk-shifting agreements and  respondents seek nothing more than the benefit of promises by the  Government to insure them against any losses arising from future  regulatory change. They seek no injunction against application of the  law to them,  as the plaintiffs did in Bowen and Merrion, cf.  Reichelderfer v. Quinn, 287 U. S. 315 (1932), and they acknowledge that  the Bank  Board and FSLIC could not bind Congress (and possibly could not   even bind their future selves) not to change regulatory policy.


71
Nor do the damages respondents seek amount to exemption from the  new law, in the manner of the compensation sought in Bowen, see supra,  at 51.  Once general jurisdiction to make an award against the  Government is conceded, a requirement to pay money supposes no surrender  of sovereign power by a sovereign with the power to contract.  See,  e.g., Amino Bros. Co. v. United States, 178 Ct. Cl. 515, 525, 372 F. 2d  485, 491 ("The Government cannot make a binding contract that it will  not exercise a sovereign power, but it can agree in a contract that if  it does so, it will pay the other contracting party the amount by which  its costs are increased by the Government's sovereign act"), cert.  denied, 389 U. S. 846 (1967).25  Even if the respondents were asking  that the Government be required to make up any capital deficiency arising from the exclusion of goodwill and capital credits from the  relevant calculations, such relief would hardly amount to an exemption  from the capital requirements of FIRREA;  after all, Glendale (the only  respondent thrift still in operation) would still be required to  maintain adequate tangible capital reserves under FIRREA, and the  purpose of the statute, the protection of the insurance fund, would be  served.  Nor would such a damages award deprive the Government of money  it would otherwise be entitled to receive (as a tax rebate would), since  the capital requirements of FIRREA govern only the allocation of  resources to a thrift and require no payments to the Government at  all.26


72
We recognize, of course, that while agreements to insure private  parties against the costs of subsequent regulatory change do not  directly impede the exercise of sovereign power, they may indirectly  deter needed governmental regulation by raising its costs.  But all  regulations have their costs, and Congress itself expressed a  willingness to bear the costs at issue here when it authorized FSLIC to  "guarantee [acquiring thrifts] against loss" that might occur as a  result of a supervisory merger.  12 U. S. C. Section(s) 1729(f)(2) (1988  ed.) (repealed 1989).  Just as we have long recognized that the   Constitution "`bar[s] Government from forcing some people alone to bear  public burdens which, in all fairness and justice, should be borne by  the public as a whole,'"  Dolan v. City of Tigard, 512 U. S. ___, ___   (slip op., at 9) (quoting Armstrong  v. United States, 364 U. S. 40, 49 (1960)), so we must reject the suggestion that the Government may simply  shift costs of legislation onto its contractual partners who are  adversely affected by the change in the law, when the Government has  assumed the risk of such change.


73
The Government's position would not only thus represent a conceptual expansion of the unmistakability doctrine beyond its historical and practical warrant, but would place the doctrine at odds  with the Government's own long-run interest as a reliable contracting  partner in the myriad workaday transaction of its agencies.  Consider  the procurement contracts that can be affected by congressional or  executive scale-backs in federal regulatory or welfare activity; or  contracts to substitute private service-providers for the Government,  which could be affected by a change in the official philosophy on  privatization; or all the contracts to dispose of federal property,  surplus or otherwise.  If these contracts are made in  reliance on the  law of contract and without specific provision for default mechanisms,27 should all the private contractors be  denied a remedy  in damages unless they satisfy the unmistakability doctrine?  The answer  is obviously no because neither constitutional avoidance nor any  apparent need to protect the Government from the consequences of  standard operations could conceivably justify applying the doctrine.  Injecting the opportunity for unmistakability litigation into every  common contract action would, however, produce the untoward result of compromising the Government's practical capacity to make contracts,  which we have held to be "of the essence of sovereignty" itself.  United  States v. Bekins, 304 U. S. 27, 51-52 (1938).28  From a practical  standpoint, it would make an inroad on this power, by expanding the  Government's opportunities for contractual abrogation, with the certain  result of undermining the Government's credibility at the bargaining  table and increasing the cost of its engagements.  As Justice Brandeis recognized, "[p]unctilious fulfillment of contractual obligations is  essential to the maintenance of the credit of public as well as private  debtors."  Lynch v. United States, 292 U. S., at 580.29


74
The dissent's only answer to our concern is to recognize that "Congress may not simply abrogate a statutory provision obligating performance without breaching the contract and rendering itself liable  for damages." Post, at 6 (citing Lynch,  supra, at 580). Yet the only  grounds that statement suggests for distinguishing Lynch from the  present case is that there the contractual obligation was embodied in a  statute.  Putting aside the question why this distinction should make  any difference, we note that the dissent seemingly does not deny that  its view would apply the unmistakability doctrine to the vast majority  of governmental contracts, which would be subject to abrogation  arguments based on subsequent sovereign acts.  Indeed, the dissent goes  so far as to argue that our conclusion that damages are available for breach even where the parties did not specify  a remedy in the contract  depends upon "reading of additional terms into the contract."  Post, at  7.  That, of course, is not  the law; damages are always the default  remedy for breach of contract.30 And we suspect that most government  contractors would be quite surprised by the dissent's conclusion that,  where they have failed to require an express provision that damages will  be available for breach, that remedy must be "implied in law" and therefore unavailable under the Tucker Act, post, at 7-8.


75
Nor can the dissenting view be confined to those contracts that  are "regulatory" in nature.  Such a distinction would raise enormous  analytical difficulties; one could ask in this case whether the  Government as contractor was regulating or insuring. The dissent  understandably does not advocate such a distinction, but its failure to  advance any limiting principle at all would effectively compromise the  Government's capacity as a reliable, straightforward contractor whenever  the subject matter of a contract might be subject to subsequent  regulation, which is most if not all of the time.31  Since the facts  of the present case demonstrate that Government may wish to further its  regulatory goals through contract, we are unwilling to adopt any  rule of construction that would weaken the Government's capacity to do business  by converting every contract it makes into an arena for unmistakability  litigation.


76
In any event, we think the dissent goes fundamentally wrong when  it concludes that "the issue of remedy for . . . breach" can arise only  "[i]f the sovereign did surrender its power unequivocally."  Post, at 6.  This view ignores the other, less remarkable possibility actually found  by both courts that construed these contracts: that the Government  agreed to do something that did not implicate its sovereign powers at  all, that is, to indemnify its contracting partners against financial losses arising from regulatory change.  We accordingly hold that the  Federal Circuit correctly refused to apply the unmistakability doctrine  here.  See 64 F. 3d, at 1548.  There being no need for an unmistakably  clear "second promise" not to change the capital requirements, it is  sufficient that the Government undertook an obligation that it  subsequently found itself unable to perform.  This conclusion does not,  of course, foreclose the assertion of a defense that the contracts were ultra vires or that the Government's obligation should be discharged  under the common-law doctrine of impossibility, see infra, at 49-52,  52-72, but nothing in the nature of the contracts themselves raises a  bar to respondents' claims for breach.32

B.

77
The answer to the Government's unmistakability argument also meets its two related contentions on the score of ultra vires: that the  Bank Board and FSLIC had no authority to bargain away Congress's power  to change the law in the future, and that we should in any event find no  such authority conferred without an express delegation to that effect.  The first of these positions rests on the reserved powers doctrine,  developed in the course of litigating claims that States had violated  the Contract Clause. See supra, at 34.  It holds that a state  government may not contract away "an essential attribute of its  sovereignty," United States Trust, 431 U. S., at 23, with the classic  example  of its limitation on the scope of the Contract Clause being  found in Stone v. Mississippi, 101 U. S. 814 (1880).  There a  corporation bargained for and received a state legislative charter to  conduct lotteries, only to have them outlawed by statute a year later. This Court rejected the argument that the  charter immunized the corporation from the operation of the statute, holding that "the legislature cannot bargain away the police power of a State." Id., at  817.33


78
The Government says that "[t]he logic of the doctrine . . . applies equally to contracts alleged to have been made by the federal  government."  Brief for United States 38.  This may be so but is also  beside the point, for the reason that the Government's ability to set  capital requirements is not limited by the Bank Board's and FSLIC's  promises to make good any losses arising from subsequent regulatory  changes.  See supra, at 41-43. The answer to the Government's  contention that the State cannot barter away certain elements of its  sovereign power is that a contract to adjust the risk of subsequent  legislative change does not strip the Government of its legislative  sovereignty.34


79
The same response answers the Government's demand for express delegation of any purported authority to fetter the exercise of sovereign power.  It is true, of course, that in Home Telephone & Telegraph Co. v. City of Los Angeles, 211 U. S., at 273, we said that  "[t]he surrender, by contract, of a power of government, though in  certain well-defined cases it may be made by legislative authority, is a  very grave act, and the surrender itself, as well as the authority to  make it, must be closely scrutinized."  Hence, where "a contract has the  effect of extinguishing pro tanto an undoubted power of government," we have insisted that "both [the contract's] existence and the authority to  make it must clearly and unmistakably appear, and all doubts must be  resolved in favor of the continuance of the power."  Ibid.  But Home  Telephone & Telegraph simply has no application to the present case,  because there were no contracts to surrender the Government's sovereign  power to regulate.35


80
There is no question, conversely, that the Bank Board and FSLIC  had ample statutory authority to do what the Court of Federal Claims and  the Federal Circuit found they did do, that is, promise to permit  respondents to count supervisory goodwill and capital credits toward  regulatory capital and to pay respondents' damages if that performance  became impossible.  The organic statute creating FSLIC as an arm of the  Bank Board, 12 U. S. C. Section(s) 1725(c) (1988 ed.) (repealed 1989),  generally empowered it "[t]o make contracts,"36 and Section(s)  1729(f)(2), enacted in 1978, delegated more specific powers in the  context of supervisory mergers:


81
"Whenever an insured institution is in default or, in the      judgment of the Corporation, is in danger of default, the      Corporation  may, in order to facilitate a merger or      consolidation of such insured  institution with another      insured institution . . . guarantee such other  insured      institution against loss by reason of its merging or      consolidating with or assuming the liabilities and purchasing      the assets  of such insured institution in or in  danger of      default."  12 U. S. C.  Section(s) 1729(f)(2) (1976 ed. Supp.      V) (repealed 1989).


82
Nor is there any reason to suppose that the breadth of this authority was not meant to extend to contracts governing treatment of  regulatory capital.  Congress specifically recognized FSLIC's authority  to permit thrifts to count goodwill toward capital requirements when it  modified the National Housing Act in 1987:


83
"No provision of this section shall affect the authority of      the   [FSLIC] to authorize insured institutions to utilize      subordinated debt  and goodwill in meeting reserve and other      regulatory requirements."  12  U. S. C. Section(s) 1730h(d)      (1988 ed.) (repealed 1989).


84
See also S. Rep. No. 100-19, p. 55 (1987) ("It is expected that  the [Bank Board] will retain its own authority to determine . . . the  components and level of capital to be required of FSLIC-insured  institutions"); NLRB v. Bell Aerospace Co., 416 U. S. 267, 275 (1974)  ("[S]ubsequent legislation declaring the intent of an earlier statute is  entitled to significant weight"). There is no serious question that  FSLIC (and the Bank Board acting through it) was authorized to make the  contracts in issue.

IV.

85
The Government's final line of defense is the sovereign acts doctrine, to the effect that "`[w]hatever acts the government may do, be  they legislative or executive, so long as they be public and general,  cannot be deemed specially to alter, modify, obstruct or violate the  particular contracts into which it enters with private persons.'"  Horowitz v. United States, 267 U. S., at 461 (quoting Jones v. United  States, 1 Ct. Cl. 383, 384 (1865)). Because FIRREA's alteration of the  regulatory capital requirements was a "public and general act," the  Government says, that act could not amount to a breach of the  Government's contract with respondents.


86
The Government's position cannot prevail, however, for two independent reasons.  The facts of this case do not warrant application  of the doctrine, and even if that were otherwise the doctrine would not  suffice to excuse liability under this governmental contract allocating  risks of regulatory change in a highly regulated industry.


87
In Horowitz, the plaintiff sued to recover damages for breach of  a contract to purchase silk from the Ordnance Department.  The agreement  included a promise by the Department  to ship the silk within a certain  time, although the manner of shipment does not appear to have been a  subject of the contract.  Shipment was delayed because the United States  Railroad Administration placed an embargo on shipments of silk by  freight, and by the time the silk reached Horowitz the price had  fallen,  rendering the deal unprofitable.  This Court barred any  damages award  for the delay, noting that "[i]t has long been held by the Court of Claims that the United States when sued as  a contractor cannot be held  liable for an obstruction to the performance of the particular contract  resulting from its public and general acts as a sovereign."  267 U. S.,  at 461.  This statement was not, however, meant to be read as broadly as  the Government urges, and the key to its proper scope is found in that  portion of our opinion explaining that the essential point  was to put  the Government in the same position that it would have enjoyed as a private contractor:


88
"`The two characters which the government possesses as a      contractor and as a sovereign cannot be thus fused; nor can      the United  States while sued in the one character be made      liable in damages for  their acts done in the other.      Whatever acts the government may do, be  they legislative or      executive, so long as they be public and general,  cannot be      deemed specially to alter, modify, obstruct or violate the      particular contracts into which it enters with private      persons. . . .  In this court the United States appear simply      as contractors; and they  are to be held liable only within      the same limits that any other  defendant would be in any      other court.  Though their sovereign acts  performed for the      general good may work injury to some private  contractors,      such parties gain nothing by having the United  States as      their defendants.'"  Ibid. (quoting Jones v. United States,      supra, at  384).


89
The early Court of Claims cases upon which Horowitz relied anticipated the Court's emphasis on the Government's dual and distinguishable capacities and on the need to treat the government-as-contractor the same as a private party.  In Deming v.  United States, 1 Ct. Cl. 190 (1865), the Court of Claims rejected a suit  by a supplier of army rations whose costs increased as a result of  Congress's passage of the Legal Tender Act.  The Deming court thought it  "grave error" to suppose that "general enactments of Congress are to be  construed as evasions of [the plaintiff's] particular contract."  Id.,  at 191.  "The United States as a contractor are not responsible for the  United States as a lawgiver," the court said.  "In this court the United States can be held to no greater liability than other contractors in  other courts." Ibid. Similarly, Jones v. United States, supra refused a  suit by surveyors employed by the Commissioner of Indian Affairs, whose  performance had been hindered by the United States's withdrawal of  troops from Indian country.  "The  United States as a contractor," the  Claims Court concluded, "cannot be held liable directly or indirectly  for the public acts of the United States as a sovereign." Id., at 385.


90
The Government argues that "[t]he relevant question [under these  cases] is whether the impact [of governmental action] . . . is caused by  a law enacted to govern regulatory policy and to advance the general  welfare."  Brief for United States 45.  This understanding assumes that  the dual characters of Government as contractor and legislator are never  "fused" (within the meaning of Horowitz) so long as the object of the  statute is regulatoryand  meant to accomplish some public good.  That  is, on the Government's reading, a regulatory object is proof against treating the legislature as having acted to avoid the Government's contractual obligations, in which event the sovereign acts defense would  not be applicable.  But the Government's position is open to serious  objection.


91
As an initial matter, we have already expressed our doubt that a  workable line can be drawn between the Government's "regulatory" and  "nonregulatory" capacities.  In the present case, the Government chose  to regulate capital reserves to protect FSLIC's insurance fund, much as  any insurer might impose restrictions on an insured as a condition of  the policy.  The regulation thus protected the Government in its  capacity analogous to a private insurer, the same capacity in which it entered into supervisory merger agreements to convert some of its financial insurance obligations into responsibilities of private entrepreneurs.  In this respect, the supervisory mergers bear some analogy to private contracts for reinsurance.37  On the other hand,  there is no question that thrift regulation is, in fact, regulation, and  that both the supervisory mergers of the 1980's and the subsequent  passage of FIRREA were meant to advance a broader public interest.  The  inescapable conclusion from all of this is that the Government's  "regulatory" and "nonregulatory" capacities were fused in the instances  under consideration, and we suspect that such fusion will be so common  in the modern regulatory state as to leave a criterion of "regulation"  without much use in defining the scope of the sovereign acts  doctrine.38


92
An even more serious objection is that allowing the Government  to avoid contractual liability merely by passing any "regulatory  statute," would flaunt the general principle that, "[w]hen the United  States enters into contract relations, its rights and duties therein are  governed generally by the law applicable to contracts between private  individuals." Lynch v. United States, 292 U. S., at 579.39  Careful  attention to the cases shows that the sovereign acts doctrine was meant  to serve this principle, not undermine it.  In Horowitz, for example, if the defendant had been a private shipper, it would have been entitled to  assert the common-law defense of impossibility of performance against  Horowitz's claim for breach.  Although that defense is traditionally  unavailable where the barrier to performance arises from the act of the  party seeking discharge, see Restatement (Second) of Contracts  Section(s) 261; 2 E. Farnsworth, Farnsworth on Contracts Section(s) 9.6,  p. 551 (1990); cf. W. R. Grace & Co. v. Rubber Workers, 461 U. S. 757, 767-768, n. 10 (1983), Horowitz held that the "public and general" acts  of the sovereign are not attributable to the Government as contractor so  as to bar the Government's right to  discharge. The sovereign acts  doctrine thus balances the Government's need for freedom to legislate  with its obligation to honor its contracts by asking whether the  sovereign act is properly attributable to the Government as contractor.  If the answer is no, the Government's defense to liability depends on  the answer to the further question, whether that act would otherwise  release the Government from liability under ordinary principles of contract law.40 Neither question can be answered in the Government's  favor here.

A.

93
If the Government is to be treated like other contractors, some  line has to be drawn in situations like the one before us between  regulatory legislation that is relatively free of government  self-interest and therefore cognizable for the purpose of a legal  impossibility defense and, on the other hand, statutes tainted by a  governmental object of self-relief.  Such  an object is not necessarily  inconsistent with a public purpose, of course, and when we speak of  governmental "self-interest," we simply mean to identify instances in  which the Government seeks  to shift the costs of meeting its legitimate  public responsibilities to private parties.  Cf. Armstrong v. United  States, 364 U. S., at 49 (The Government may not "forc[e] some people  alone to bear public burdens which . . . should be borne  by the public  as a whole").  Hence, while the Government might legitimately conclude that a given contractual commitment was no longer in the public interest, a government seeking relief from  such commitments through  legislation would obviously not be in a position comparable to that of  the private contractor who willy-nilly was barred by law from  performance.  There would be, then, good reason in such circumstance to  find the regulatory and contractual characters of the Government fused  together, in Horowitz's terms, so that the Government should not have  the benefit of the defense.41


94
Horowitz's criterion of "public and general act" thus reflects  the traditional "rule of law" assumption that generality in the terms by  which the use of power is authorized  will tend to guard against its  misuse to burden or benefit the few unjustifiably.42  See, e.g.,  Hurtado v. California, 110 U. S. 516, 535-536 (1884) ("Law . . .  must  be not a special rule for a particular person or a particular case, but  . . . `[t]he general law . . .' so `that every citizen shall hold his  life, liberty, property and immunities under the protection of the  general rules which govern society'") (citation omitted).43  Hence, governmental action will not be held against the Government for purposes  of the impossibility defense so long as  the action's impact upon public  contracts is, as in Horowitz, merely incidental to the accomplishment of  a broader governmental objective.  See O'Neill v. United States, 231 Ct.  Cl. 823, 926 (1982) (noting that the sovereign acts doctrine recognizes  that "the Government's actions, otherwise legal, will occasionally incidentally impair the performance of contracts").44  The greater the Government's self-interest, however, the more suspect becomes the  claim that its private contracting partners ought to bear the financial  burden of the Government's own improvidence, and where a substantial  part of the impact of the Government's action rendering performance impossible falls on its own contractual obligations, the defense will be  unavailable.  Cf. Sun Oil Co. v. United States, 215 Ct. Cl. 716, 768,  572 F. 2d 786, 817 (1978) (rejecting sovereign acts defense where the  Secretary of the Interior's actions were "`directed principally and  primarily at plaintiffs' contractual right'").45


95
The dissent would adopt a different rule that the Government's  dual roles of contractor and sovereign may never be treated as fused,  relying upon Deming's pronouncement that "[t]he United States as a  contractor are not responsible for the United States as a lawgiver."  Post, at 9 (quoting 1 Ct. Cl., at  191). But that view would simply  eliminate the "public and general" requirement, which presupposes that  the Government's capacities must be treated as fused when the Government  acts in  a non-general way.  Deming itself twice refers to the "general" quality of the enactment at issue, 1 Ct. Cl., at 191, and notes that  "[t]he statute bears upon [the governmental contract] as it bears upon  all similar contracts between citizens, and affects it in no other way."  Ibid.  At the other extreme, of course, it  is clear that any benefit at  all to the Government will not disqualify an act as "public and  general"; the silk embargo in Horowitz, for example, had the incidental  effect of releasing the Government from its contractual obligation to  transport Mr. Horowitz's shipment.  Our holding that a governmental act  will not be public and general if it has the substantial effect of releasing the Government from its contractual obligations strikes a  middle course between these two extremes.46

B.

96
In the present case, it is impossible to attribute the exculpatory "public and general" character to FIRREA.  Although we have  not been told the dollar value of the relief the Government would obtain  if insulated from liability under contracts such as these, the attention  given to the regulatory contracts prior to passage of FIRREA shows that  a substantial effect on governmental contracts is certain.  The statute  not only had the purpose of eliminating the very accounting gimmicks  that acquiring thrifts had been promised, but the specific object of  abrogating enough of the acquisition contracts as to make that  consequence of the legislation a focal point of the congressional  debate.47 Opponents of FIRREA's new capital requirements complained  that "[i]n its present form, [FIRREA] would abrogate written agreements made by the U. S. government to thrifts that acquired failing  institutions by changing the rules in the middle of the game." 135 Cong.  Rec. H2783 (June 15, 1989) (Statement of Rep. Ackerman).  Several  congressmen observed that, "[s]imply put, [Congress] has reneged on the  agreements that the government entered into concerning supervisory goodwill."  House Report, at 498 (additional views of Reps. Annunzio,  Kanjorski, and Flake).48  A similar focus on  the supervisory merger  contracts is evident among proponents of  the legislation; Representative  Rostenkowski, for example, insisted that "the Federal Government should  be able to change requirements when they have proven to be disastrous  and contrary to the public interest.  The contracts between the savings  and loan owners when they acquired failing institutions in the early 1980's are not contracts written in stone."  135 Cong. Rec., at H2717   (June 15, 1989).49


97
This evidence of intense concern with contracts like the ones before us suffices to show that FIRREA had the substantial  effect of  releasing the Government from its own contractual obligations. Congress  obviously expected FIRREA to have such an effect, and in the absence of  any evidence to the contrary we accept its factual judgment that this  would be so.50  Nor is Congress's own judgment neutralized by the  fact, emphasized by the Government, that FIRREA did not formally target  particular transactions. Legislation can almost always be written in a  formally general way, and the want of an identified target is not much  security when a measure's impact nonetheless falls substantially upon  the Government's contracting partners.  For like reason, it does not answer the legislative record to insist, as the Government does, that  the congressional focus is  irrelevant because the broad purpose of  FIRREA was to "advance the general welfare."  Brief for United States  45.  We assume nothing less of all congressional action, with the result  that an intent to benefit the public can no more serve as a criterion  of  a "public and general" sovereign act than its regulatory character  can.51 While our limited enquiry into the background  and evolution  of the thrift crisis leaves us with the understanding that Congress acted to protect the public in the FIRREA legislation, the extent to  which this reform relieved the Government of its own contractual  obligations precludes a finding that the statute is a "public and  general" act for purposes of the sovereign acts defense.52

C.

98
Even if FIRREA were to qualify as "public and general," however,  other fundamental reasons would leave the sovereign acts doctrine  inadequate to excuse the Government's breach of these contracts.  As  Horowitz makes clear, that defense simply relieves the Government as  contractor from the traditional blanket rule that a contracting party  may not obtain discharge if its own act rendered performance impossible.  But even if the Government stands in the place of a private party with  respect to "public and general" sovereign acts, it does not follow that discharge will always be available, for the common-law doctrine of impossibility imposes additional requirements before a party  may avoid  liability for breach.  As the Restatement puts it,


99
"[w]here, after a contract is made, a party's per-formance is      made impracticable without his fault by the occurrence of an      event the  nonoccurrence of which was a basic assumption on      which the contract was  made, his duty to render that      performance is discharged, unless the  language  or the      circumstances indicate the contrary."  Restatement      (Second) of Contracts Section(s) 261.


100
See also 2 Farnsworth on Contracts Section(s) 9.6, at 543-544 (listing four elements of the impossibility defense).  Thus, since the  object of the sovereign acts defense is to place the Government as  contractor on par with a private contractor in the same circumstances,  Horowitz, 267 U. S., at 461, the Government, like any other defending  party in a contract action, must show that the passage of the statute  rendering its performance impossible was an event contrary to the basic  assumptions on which the parties agreed, and must ultimately show that  the language or circumstances do not indicate that the Government should  be liable in any case.  While we do not say that these conditions can  never be satisfied when the Government contracts with participants in a  regulated industry for particular regulatory treatment, we find that the  Government as  such a contractor has not satisfied the conditions for  discharge in the present case.

1.

101
For a successful impossibility defense the Government would have  to show that the nonoccurrence of regulatory amendment was a basic  assumption of these contracts.  See, e.g., Restatement (Second) of  Contracts Section(s) 261; 2 Farnsworth, supra, Section(s) 9.6, at  549-550.  The premise of this requirement is that the parties will have  bargained with respect to any risks that are both within their  contemplation and central to the substance of the contract; as Justice  Traynor said, "[i]f [the risk] was foreseeable there should have been  provision for it in the contract, and the absence of such a provision  gives rise to the inference that the risk was assumed."  Lloyd v.  Murphy, 25 Cal. 2d 48, 54, 153 P.2d 47, 50 (1944).53  That inference  is particularly compelling, where, as here, the contract provides for particular regulatory treatment (and, a fortiori, allocates  the risk of  regulatory change).  Such an agreement reflects the inescapable  recognition that regulated industries in the modern world do not live  under the law of the Medes and the Persians, and the very fact that such  a contract is made at all is at odds with any assumption of regulatory  stasis.  In this particular case, whether or not the reach of the FIRREA  reforms was anticipated by the parties, there is no doubt that some  changes in the regulatory structure governing thrift capital reserves were both foreseeable and likely when these parties contracted with the  Government, as even the Government agrees.  It says in its brief to this  Court that "in light of the frequency with which federal capital  requirements had changed in the past . . ., it would have been  unreasonable for Glendale, FSLIC, or the Bank Board to expect or rely  upon the fact that those requirements would remain unchanged."  Brief  for United States 26; see also id., at 3, n. 1 (listing the  changes).54  The Federal Circuit panel in this case likewise found  that the regulatory capital requirements "have been the subject of  numerous statutory and regulatory changes over the years," and "changed  three times in 1982 alone."  994 F. 2d, at 801.55  Given these  fluctuations, and given the fact that a single modification of the  applicable regulations could, and ultimately did, eliminate virtually  all of the consideration provided by the Government in these transactions, it would be absurd to say  that the nonoccurrence of a  change in the regulatory capital rules was a basic assumption upon which  these contracts were made.  See, e.g., Moncrief v. Williston Basin  Interstate Pipeline Co., 880 F. Supp. 1495, 1508 (DWyo. 1995); Vollmar  v. CSX Transportation, Inc., 705 F. Supp. 1154, 1176 (EDVa. 1989),   aff'd, 898 F. 2d 413 (CA4 1990).

2.

102
Finally, any governmental contract that not only deals with regulatory change but allocates the risk of its occurrence will, by  definition, fail the further condition of a successful impossibility  defense, for it will indeed indicate that the parties' agreement was not  meant to be rendered nugatory by a change in the regulatory law.  See  Restatement (Second) of Contracts Section(s) 261 (no impossibility  defense where the "language or the circumstances" indicate allocation of  the risk to the party seeking discharge).56  The mere fact that the Government's contracting agencies (like the Bank Board and FSLIC) could  not themselves preclude Congress from changing the regulatory rules does  not, of course, stand in the way of concluding that those agencies  assumed the risk of such change, for determining the consequences of  legal change was the point of the agreements.  It is, after all, not  uncommon for a contracting party to assume the risk of an event he  cannot control,57 even when that party is an agent of the Government.  As the Federal Circuit has recognized, "[government] contracts routinely  include provisions shifting financial responsibility to the Government for events which might occur in the future.  That some of these events  may be triggered by sovereign government action does not render the  relevant contractual provisions any less binding than those which  contemplate third party acts, inclement weather and other force majeure."  Hughes Communications Galaxy, Inc. v. United States, 998 F.  2d 953, 958-959 (CA Fed. 1993).58


103
As to each of the contracts before us, our agreement with the conclusions of the Court of Federal Claims and the Federal Circuit forecloses any defense of legal impossibility, for those courts found  that the Bank Board resolutions, Forbearance Letters, and other  documents setting forth the accounting treatment to be accorded  supervisory goodwill generated by the transactions were not mere  statements of then-current regulatory policy, but in each instance were  terms in an allocation of risk of regulatory change that was essential  to the contract between  the parties. See supra, at 21-23.  Given that  the parties went  to considerable lengths in procuring necessary  documents and drafting broad integration clauses to incorporate their  terms into the contract itself, the Government's suggestion that the parties meant to say only that the regulatory treatment laid out in  these documents would apply as an initial matter, subject to later  change at the Government's election, is unconvincing.  See ibid.  It  would, indeed, have been madness for respondents to have engaged in  these transactions with no more protection than the Government's reading  would have given them, for the very existence of their institutions  would then have been in jeopardy from the moment their agreements were  signed.


104
We affirm the Federal Circuit's ruling that the United States is  liable to respondents for breach of contract.  Because the Court of  Federal Claims has not yet determined the appropriate measure or amount  of damages in this case, we remand for further proceedings consistent  with our opinion.


105

It is so ordered.



106
Justice Breyer, concurring.


107
I join the plurality opinion because, in my view, that opinion  is basically consistent with the following understanding of what the  dissent and the Government call the "unmistakability doctrine."  The  doctrine appears in the language of earlier cases, where the Court  states that


108
"sovereign power, even when unexercised, is an enduring      presence  that governs all contracts subject to the      sovereign's jurisdiction, and  will remain intact unless      surrendered in unmistakable terms."  Merrion  v. Jicarilla      Apache Tribe, 455 U. S. 130, 148 (1982) (emphasis added).


109
See also United States v. Cherokee Nation of Okla., 480 U. S. 700, 706-707 (1987); Bowen v. Public Agencies Opposed to Social Security  Entrapment, 477 U. S. 41, 52-53 (1986).  The Government and the dissent  believe that this language normally shields the Government from contract  liability where a change in the law prevents it from carrying out its  side of the bargain.   In my view, however, this language, while perhaps  appropriate in the circumstances of the cases in which it appears, was  not intended to displace the rules of contract interpretation applicable  to the Government as well as private contractors in numerous ordinary cases, and in certain unusual cases, such as this one.  Primarily for  reasons explained in the plurality opinion, this doctrine does not  shield the Government from liability here.


110
Both common sense and precedent make clear that an "unmistakable" promise to bear the risk of a change in the law is not  required in every circumstance in which a private party seeks contract  damages from the Government.  Imagine, for example, that the General  Services Administration or the Department of Defense were to enter into  a garden variety contract to sell a surplus commodity such as oil, under  circumstances where (1) the time of shipment is critically important,  (2) the parties are aware that pending environmental  legislation could  prevent the shipment, and (3) the fair inference from the circumstances  is that if the environmental legislation occurs and prevents shipment, a  private seller would incur liability for failure to ship on time.


111
Under ordinary principles of contract law, one would construe the contract in terms of the parties' intent, as revealed by language  and circumstance.  See The Binghamton Bridge, 3 Wall. 51, 74 (1866)  ("All contracts are to be construed to accomplish the intention of the  parties"); Restatement (Second) of Contracts Section(s) 202(1) (1979) ("Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight").  If the language and circumstances showed that the parties intended the seller to bear the  risk of a performance-defeating change in the law, the seller would have  to pay damages.  See id., Section(s) 261 (no liability where "a party's  performance is made impracticable without his fault by the occurrence of  an event [i.e., the new environmental regulation] the non-occurrence of  which was a basic assumption on which the contract was made . . . unless  the language or the circumstances indicate the contrary.")  (emphasis  added).


112
The Court has often said, as a general matter, that the "rights  and duties" contained in a government contract "are governed generally  by the law applicable to contracts between private individuals."  Lynch  v. United States, 292 U. S. 571, 579 (1934); see Perry v. United States,  294 U. S. 330, 352 (1935) (same); Sinking Fund Cases, 99 U. S. 700, 719   (1879) ("The United States are as much bound by their contracts as are individuals.  If they repudiate their obligations, it is as much repudiation, with all the wrong and reproach that term implies, as it  would be if the repudiator had been a State or a municipality or a  citizen"); United States v. Klein, 13 Wall. 128, 144 (1872) (same);  United States v. Gibbons, 109 U. S. 200, 203-204 (1883) (where contract  language "susceptible of two meanings," government's broader obligation  was "sufficiently plain" from "the circumstances attending the  transaction"); see  also, e.g., Russell v. Sebastian, 233 U. S. 195, 205   (1914) (public grants to be given a "fair and reasonable" interpretation  that gives effect to what it "satisfactorily appears" the government intended to convey).


113
The Court has also indicated that similar principles apply in certain cases where courts have had to determine whether or not a government seller is liable involving contracts resembling the ones  before us.  In Lynch, supra, for example, the Court held that the  Federal Government must compensate holders of "war risk insurance"  contracts, the promises of which it had abrogated through post-contract  legislation.  In the "gold clause" case, Perry, supra, the Court held  that subsequent legislation could not abrogate a government bond's  promises to pay principal and interest in gold.  In neither case did the  Court suggest that an "unmistakable" promise, beyond that discernible  using ordinary principles of contract interpretation, was necessary  before liability could be imposed  on the Government.


114
This approach is unsurprising, for in practical terms it ensures  that the Government is able to obtain needed goods and services from  parties who might otherwise, quite rightly, be unwilling to undertake  the risk of government contracting.  See, e.g., Detroit v. Detroit  Citizens' Street R. Co., 184 U. S. 368, 384 (1902) (rejecting as "hardly  . . . credible" the city's suggestion that the fare rate agreed on with  railroad company, which "amounted to a contract," would be "subject to  change from time to time" at the city's pleasure); Murray v. Charleston,  96 U. S. 432, 445 (1878) (a government contract "should be regarded as  an assurance that [a sovereign right to withhold payment] will not be  exercised.  A promise to pay, with a reserved right  to deny or change  the effect of the promise, is an absurdity"); New Jersey v. Yard, 95 U.  S. 104, 116-117 (1877) (same).  This is not to say that the Government  is always treated just like a  private party.  The simple fact that it is  the Government may well change the underlying circumstances, leading to  a different inference as to the parties' likely intent-say, making it  far less likely that they intend to make a promise that will oblige the  government to hold private parties harmless in the event of  a change in  the law.  But to say this is to apply, not to disregard, the ordinary rule of contract law.


115
This approach is also consistent with congressional intent, as  revealed in Congress' determination to permit, under the Tucker Act,  awards of damages and other relief against the United States for "any  claim . . . founded . . . upon any express or implied contract."  28 U.  S. C. Section(s) 1491(a)(1).  The thrifts invoked this provision in  their complaints as the basis for jurisdiction to adjudicate their  claims in the lower courts, see App. 8 (Winstar), 137 (Statesman), and  546 (Glendale); and, as the majority explains,  ante, at 18, the lower  courts held that each proved the existence of an express promise by the Government to grant them  particular regulatory treatment for a period of  years.  For my purposes, the provision is relevant only to show that  Congress clearly contemplated the award of damages for breach against  the Government in some contexts where the Government's promises are far  from "unmistakable" as the Government defines that term.  While in this  case, the lower courts found the promises to be "express", this Court  has in other cases interpreted Section(s)  1491(a)(1) to permit claims for relief based on an "implied in fact" promise, which can be a promise  "founded upon a meeting of minds, which, although not embodied in an  express contract, is inferred, as a fact, from conduct of the parties  showing, in the light of the surrounding circumstances, their tacit  understanding."  Baltimore & Ohio R. Co. v. United States, 261 U. S.  592, 597 (1923); see Hercules, Inc. v. United States, 516 U. S. ___   (1996) (slip op., at 6-7). These interpretations, as well as the  statutory language, lend further support to the view that ordinary  government contracts are typically governed by the rules applicable to  contracts between private parties.


116
There are, moreover, at least two good reasons to think that the  cases containing special language of "unmistakability"  do not, as the  Government suggests, impose an additional "clear-statement" rule, see  Brief for Petitioner 19, that shields the Government from liability  here.  First, it is not clear that the "unmistakability" language was  determinative of the outcome in those cases.  In two of the three cases  in which that language appears (and several of the older cases from  which it is derived), the private parties claimed that the sovereign had effectively promised not to change the law in an area of law not mentioned in the contract at issue.  In Merrion v. Jicarilla Apache  Tribe, 455 U. S., at 148, for example, the contracts were leases by a  sovereign Indian Tribe to private parties of rights to extract oil and  gas from tribal lands.  The private party claimed that the leases  contained an implicit waiver of the power to impose a severance tax on  the oil and gas.  The Court pointed out that the leases said nothing  about taxes, thereby requiring an inference of intent from "silence."  Ibid.  Though the opinion contains language of "unmistakability," the  Court was not called upon in Merrion to decide whether a sovereign's  promise not to change the law (or to pay damages if it did) was clear  enough to justify liability, because there was no evidence of any such promise in the "contracts" in that case.  Yet, that  is the effect the  Government asks us to give the "unmistakability" language in Merrion  here.


117
The Court in Merrion cited Home Building & Loan Assn. v. Blaisdell, 290 U. S. 398 (1934), and St. Louis v. United Railways Co.,  210 U. S. 266 (1908), which in turn referred to a line of cases in which  the Court held that a government's grant of a bank charter did not carry  with it a promise not to tax the bank unless expressed "in terms too  plain to be mistaken."  Jefferson Branch Bank v. Skelly, 1 Black 436,  446 (1862). These cases illustrate the same point made above: where a  state-granted charter, or franchise agreement, did not implicate a  promise not to tax, the Court held that no such promise was made.  See Providence Bank v. Billings, 4 Pet. 514, 560, 561 (1830) (promise not to  tax "ought not to be presumed" where "deliberate purpose of the state to  abandon" power to tax "does not appear"); St. Louis, supra, at 274   (right to tax "still exists unless there is a distinct agreement,  clearly expressed, that the sums to be paid are in lieu of all such  exactions").  But, where the sovereign had made an express promise not  to tax, the Court gave that promise its intended effect.  See Jefferson,  supra, at 450; Piqua Branch of State Bank of Ohio v. Knoop, 16 How. 369,  378 (1854) (same); New Jersey v. Yard, supra, at 115-117 (same).


118
Similarly, in the second "unmistakability" case, United States  v. Cherokee Nation of Okla., 480 U. S., at 706-707, a government treaty  granted the Tribe title to a riverbed, but it said nothing about the  Government's pre-existing right to navigate the river.  The Court held  that it was most unlikely that a treaty silent on the matter would have  conveyed the Government's navigational rights to the Tribe, particularly  since "[t]he parties . . . clearly understood that the [Government's] navigational" rights were "dominant no matter how the question of riverbed ownership was resolved."  Id., at 706.


119
The remaining case, Bowen v. Public Agencies Opposed to Social  Security Entrapment, 477 U. S. 41 (1986), concerned an alleged promise  closely related to the subject matter of the contract.  A State and  several state agencies claimed that Congress, in enacting a statute that  gave States flexibility to include or withdraw certain employees from a  federal social security program, promised not to change that  "withdrawal" flexibility.  But in Bowen, the statute itself expressly  reserved to Congress the right to "alter, amend, or repeal" any of the statute's provisions.  See id., at 55.  Hence, it is not surprising to  find language in Bowen to the effect that other circumstances would have  to be "unmistakable" before the Court could find a congressional promise  to the contrary.


120
A second reason to doubt the Government's interpretation of the  "unmistakability" language is that, in all these cases, the language was  directed at the claim that the sovereign had made a broad promise not to  legislate, or otherwise to exercise its sovereign powers.  Even in the  cases in which damages were sought (e.g., Bowen, Cherokee Nation), the  Court treated the claimed promise as a promise not to change the law,  rather than  as the kind of promise more normally at issue in contract  cases, including this one-namely, a promise that obliges the government to hold a party harmless from a change in the law that the government  remains free to make.  See, e.g., Bowen, supra, at 52 (lower court  decision "effectively . . . forbid[s] Congress to amend a provision of  the Social Security Act");  Cherokee Nation, supra, at 707 (refusing to  conclude that the Tribe "gained an exemption from the [government's  navigational] servitude simply because it received title to the riverbed  interests").  It is difficult to believe that the Court intended  its "unmistakability" language in these unusual cases to disable future  courts from inferring, from language and circumstance under ordinary  contract principles, a more narrow promise in more typical cases-say, a  promise not to abrogate, or to restrict severely through legislation and  without compensation,  the very right that a sovereign explicitly granted  by contract (e.g., the right to drill for oil, or to use the riverbed.)


121
The Government attempts to answer this objection to its reading  of the "unmistakability" language by arguing that any award of  "substantial damages" against the government for breach of contract  through a change in the law "unquestionably carries the danger that  needed future regulatory action will be deterred," and thus amounts to  an infringement on sovereignty requiring an "unmistakable" promise.  Brief for Petitioner 21. But this rationale has no logical stopping  point.  See, e.g., United States Trust Co. of N.Y. v. New Jersey, 431 U.  S. 1, 24 (1977) ("Any financial obligation could be regarded in theory  as a relinquishment of the State's spending power, since money spent to  repay debts is not available for other purposes. . . . Notwithstanding  these effects, the Court has regularly held that the States are bound by  their debt contracts").  It is difficult to see how the Court could, in  a principled fashion, apply the Government's rule in this case without  also making it applicable to the ordinary contract case (like the  hypothetical sale of oil) which, for the reasons explained above, are  properly governed by ordinary principles of contract law.  To draw the  line-i.e., to apply a more stringent rule of contract  interpretation-based only on the amount of money at stake, and therefore   (in the Government's terms) the degree to which future exercises of sovereign authority may be deterred, seems unsatisfactory.  As the Government acknowledges, see Brief for Petitioner 41, n. 34, this Court  has previously rejected the argument that Congress has "the power to  repudiate its own debts, which constitute `property' to the lender,  simply in order to save money."  Bowen, supra, at 55 (citing Perry, 294  U. S., at 350-351, and Lynch, 292 U. S., at 576-577).


122
In sum, these two factors, along with the general principle that  the government is ordinarily treated like a private party when it enters  into contracts, means that the "unmistakability" language might simply  have underscored the special circumstances that would have been required  to convince the Court of the existence of the claimed promise in the  cases before it.  At most, the language might have grown out of unique  features of sovereignty, believed present in those cases, which, for  reasons of policy, might have made appropriate a special caution in implying the claimed promise.  But, I do not believe that language was  meant to establish an "unmistakability" rule that controls more ordinary  contracts, or that controls the outcome here.


123
The Government attempts to show that such special circumstances,  warranting application of an unmistakability principle, are present in  this case.  To be sure, it might seem unlikely, in the abstract, that  the Government would have intended to make a binding promise that would  oblige it to hold the thrifts harmless from the effects of future  regulation (or legislation) in such a high-risk, highly regulated  context as the accounting practices of failing savings and loans.  But,  as  the plurality's careful examination of the circumstances reveals, that is exactly what the Government did.  The thrifts demonstrate that  specific promises were made to accord them particular regulatory  treatment for a period of years, which, when abrogated by subsequent  legislation, rendered the Government liable for breach of contract.  These promises affect only those  thrifts with pre-existing contracts of  a certain kind.  They are promises that the banks seek to infer from the  explicit language of the contracts, not ones they read into contracts  silent on the matter.  And, there is no special policy reason related to sovereignty which would justify applying an "unmistakability" principle  here.  For these reasons, I join the plurality opinion.


124
Justice Scalia, with whom Justice Kennedy and Justice Thomas join, concurring in the judgment.


125
I agree with the plurality that the contracts at issue in this  case gave rise to an obligation on the part of the Government to afford  respondents favorable accounting treatment, and that the contracts were  broken by the Government's discontinuation of that favorable treatment,  as required by FIRREA, 12 U. S. C. Section(s) 1464(t).  My reasons for  rejecting the Government's defenses to this contract action are,  however, quite different from the plurality's, so I must write  separately to state briefly the basis for my vote.


126
The plurality dispenses with three of the four "sovereign" defenses raised by the Government simply by characterizing the contracts  at issue as "risk-shifting agreements" that amount to nothing more than  "promises by the Government to insure [respondents] against any losses  arising from future regulatory change."  Ante, at 41.  Thus understood,  the plurality explains, the contracts purport, not to constrain the  exercise of sovereign power, but only to make the exercise of that power  an  event resulting in liability for the Government-with the consequence that the peculiarly sovereign defenses raised by the Government are  simply inapplicable.  This approach has several difficulties, the first  being that it has no basis in our cases, which have not made the  availability of these sovereign defenses (as opposed to their validity  on the merits) depend upon the nature of the contract at issue.  But in  any event, it is questionable whether, even as a matter of normal  contract law, the exercise in contract characterization in which the  plurality engages is really valid.  Virtually every contract operates,  not as a guarantee of particular future conduct, but as an assumption of  liability in the event of nonperformance: "The duty to keep a contract  at common law means a prediction that you must pay damages if you do not  keep it,-and nothing else."  Holmes, The Path of the Law (1897), in 3  The Collected Works of Justice Holmes 391, 394 (S. Novick ed. 1995).  See Horwitz-Matthews, Inc. v. Chicago, 78 F. 3d 1248, 1250-1251 (CA7  1996).


127
In this case, it was an unquestionably sovereign act of government-enactment and implementation of provisions of FIRREA regarding treatment of regulatory capital-that gave rise to respondents'  claims of breach of contract.  Those claims were premised on the  assertion that, in the course of entering into various agreements with  respondents, the Government had undertaken to continue certain  regulatory policies with respect to respondents' recently acquired  thrifts; and the Government countered that assertion, in classic  fashion, with the primary defense that contractual restrictions on  sovereign authority will be recognized only where unmistakably  expressed.  The "unmistakability" doctrine has been applied to precisely  this sort of situation-where a sovereign act is claimed to deprive a party of the benefits of a prior bargain with the government. See,  e.g., Merrion v. Jicarilla Apache Tribe, 455 U. S. 130, 135-136, 145-148   (1982).


128
Like The Chief Justice, see post, at 1-8, I believe that the unmistakability doctrine applies here, but unlike him I do not think it  forecloses respondents' claims.  In my view, the doctrine has little if  any independent legal force beyond what would be dictated by normal  principles of contract interpretation.  It is simply a rule of presumed   (or implied-in-fact) intent.  Generally, contract law imposes upon a party to a contract liability for any impossibility of performance that  is attributable to that party's own actions.  That is a reasonable  estimation of what the parties intend.  When I promise to do x in  exchange for your doing y, I impliedly promise not to do anything that  will disable me from doing x, or disable you from doing y-so that if  either of our performances is rendered impossible by such an act on my  part, I am not excused from my obligation.  When the contracting party  is the government, however, it is simply not reasonable to presume an intent of that sort.  To the contrary, it is reasonable to presume (unless the opposite clearly appears) that the sovereign does not promise that none of its multifarious sovereign acts, needful for the  public good, will incidentally disable it or the other party from  performing one of the promised acts.  The requirement of unmistakability  embodies this reversal of the normal reasonable presumption.  Governments do not ordinarily agree to curtail their sovereign or  legislative powers, and contracts must be interpreted in a common-sense  way  against that background understanding.


129
Here, however, respondents contend that they have overcome this  reverse-presumption that the Government remains free to make its own  performance impossible through its manner of regulation. Their claim is  that the Government quite plainly promised to regulate them in a  particular fashion, into the future.  They say that the very subject  matter of these agreements, an essential part of the quid pro quo, was  government regulation; unless the Government is bound as to that  regulation, an aspect of the transactions that reasonably must be viewed  as a sine qua non of their assent becomes illusory.  I think they are  correct.  If, as the dissent believes, the Government committed only "to  provide [certain] treatment unless and until there is subsequent  action," post, at 13, then the Government in effect said "we promise to regulate in this fashion for as long as we choose to regulate in this  fashion"-which is an absolutely classic description of an illusory  promise.  See 1 R. Lord, Williston on Contracts Section(s) 1:2, p. 11   (4th ed. 1990).  In these circumstances, it is unmistakably clear that  the promise to accord favorable regulatory treatment must be understood  as (unsurprisingly) a promise to accord favorable regulatory treatment.  I do not accept that unmistakability demands that there be a further promise not to go back on the promise to accord favorable regulatory  treatment.


130
The dissent says that if the Government agreed to accord the favorable regulatory treatment "in the short term, but made no commitment about . . . the long term, respondents still received consideration."  Post, at 13.  That is true enough, but it is quite  impossible to construe these contracts as providing for only "short  term" favorable treatment, with the long term up for grabs: either there  was an undertaking to regulate respondents as agreed for the specified  amortization periods, or there was no promise regarding the future at  all-not even so much as a peppercorn's worth.


131
In sum, the special role of the agencies, and the terms and circumstances of the transactions, provide an adequate basis for saying  that the promises which the trial court and the Court of Appeals for the  Federal Circuit found to have been made in these cases were unmistakable  ones.  To be sure, those courts were not looking for "unmistakable"  promises, see ibid., but unmistakability is an issue of law that we can  determine here. It was found below that the Government had plainly made  promises to regulate in a certain fashion, into the future; I agree with those findings, and I would conclude, for the reasons set forth above,  that the promises were unmistakable.  Indeed, it is hard to imagine what  additional assurance that the course of regulation would not change  could have been demanded-other than, perhaps, the Government's promise  to keep its promise.  That is not what the doctrine of unmistakability  requires.  While it is true enough, as the dissent points out, that one  who deals with the Government may need to "`turn square corners,'" post,  at 14-15 (quoting Rock Island, A. & L. R. Co. v. United States, 254 U.  S. 141, 143 (1920)), he need not turn them twice.


132
The Government's remaining arguments are, I think, readily rejected. The scope and force of the "reserved powers" and "express  delegation" defenses-which the plurality thinks inapplicable based on  its view of the nature of the contracts at issue here, see ante, at  49-51-have not been well defined by our prior cases.  The notion of  "reserved powers" seems to stand principally for the proposition that  certain core governmental powers cannot be surrendered, see, e.g., Stone  v. Mississippi, 101 U. S. 814 (1880); thus understood, that doctrine  would have no force where, as here, the private party to the contract  does not seek to stay the exercise of sovereign authority, but merely requests damages for breach of contract.  To the extent this Court has  suggested that the notion of "reserved powers" contemplates, under some  circumstances, nullification of even monetary governmental obligations  pursuant to exercise of "the federal police power or some other  paramount power," Lynch v. United States, 292 U. S. 571, 579 (1934), I  do not believe that regulatory measures designed to minimize what are  essentially assumed commercial risks are the sort of "police power" or "paramount power" referred to.  And whatever is required by the "express  delegation" doctrine is to my mind satisfied by the statutes which the  plurality identifies as conferring upon the various federal bank  regulatory agencies involved in this case authority to enter into  agreements of the sort at issue here, see ante, at 51-52.


133
Finally, in my view the Government cannot escape its obligations  by appeal to the so-called "sovereign acts" doctrine. That doctrine was  first articulated in Court of Claims cases, and has apparently been  applied by this Court in only a single case, our 3-page opinion in  Horowitz v. United States, 267 U. S. 458, decided in 1925 and cited only  once since, in a passing reference, see Nortz v. United States, 294 U.  S. 317, 327 (1935).  Horowitz holds that "the United States when sued as  a contractor cannot be held liable for an obstruction to the performance  of [a] particular contract resulting from its public and general acts as  a sovereign."  267 U. S., at 461.  In my view the "sovereign acts"  doctrine adds little, if anything at all, to the "unmistakability"  doctrine, and is avoided whenever that one would be-i.e., whenever it is  clear from the contract in question that the Government was committing  itself not to rely upon its sovereign acts in asserting (or defending  against) the doctrine of impossibility, which is another way of saying  that the Government had assumed the risk of a change in its laws.  That this is the correct interpretation of Horowitz is made clear, I think,  by our two principal cases of this century holding that the Government  may not simply repudiate its contractual obligations, Lynch v. United  States, 292 U. S. 571 (1934), and Perry v. United States, 294 U. S. 330   (1935).  Those cases, which are barely discussed by the plurality's  opinion, failed even to mention Horowitz.  In both of them, as here,  Congress specifically set out to abrogate the essential bargain of the contracts at issue-and in both we declared such abrogation to amount to  impermissible repudiation.  See Lynch, supra, at 578-580; Perry, supra,  at 350-354.


134
For the foregoing reasons, I concur in the judgment.


135
Chief Justice Rehnquist, with whom Justice Ginsburg joins as to  Parts I, III, and IV, dissenting.


136
The plurality's opinion works sweeping changes in two related areas of the law dealing with Government contracts.  It drastically  reduces the scope of the unmistakability doctrine, shrouding the residue  with clouds of uncertainty, and it limits the sovereign acts doctrine so  that it will have virtually no future application.  I respectfully  dissent.

I.

137
The plurality properly recognizes that the unmistakability doctrine is a "special rule" of Government contracting which provides,  in essence, a "canon of contract construction that surrenders of  sovereign authority must appear in unmistakable terms."  Ante, at 19.  Exercises of the sovereign authority include of course the power to tax  and, relevant to this case, the authority to regulate.


138
The most recent opinion of this Court dealing with the unmistakability doctrine is United States v. Cherokee Nation of Okla.,  480 U. S. 700 (1987).  That case quoted language from Bowen v. Public  Agencies Opposed to Social Security Entrapment, 477 U. S. 41 (1986),  which


139
relied on Merrion v. Jicarilla Apache Tribe, 455 U. S. 130, 148   (1982), and Merrion, in turn, quoted the much earlier case of St. Louis  v. United Railways Co., 210 U. S. 266 (1908).  St. Louis involved an  agreement by the city to grant street railway companies use and  occupancy of the streets, in exchange for specified consideration which  included an annual license fee of $25 for each car used.  Id., at 272.  When the city later passed an ordinance amending the license tax and  imposing an additional tax based on the number of passengers riding each  car, the railway companies challenged that amendment as a violation of  the Contracts Clause.  The Court there said that such a governmental power to tax resides in the city "unless this right has been specifically surrendered in terms which admit of no other reasonable  interpretation."  Id., at 280.


140
Merrion, supra, was similar, but involved the sovereignty of an  Indian Tribe.  The Tribe had allowed oil companies to extract oil and  natural gas deposits on the reservation land in exchange for the usual  cash bonus, royalties, and rents to the Tribe.  The Court found that, in  so contracting, the Tribe had not surrendered its power to impose  subsequently a severance tax on that production.  Merrion explains that  "[w]ithout regard to its source [-be it Federal, State, local  Government, or Indian-] sovereign power, even when unexercised, is an  enduring presence that governs all contracts subject to the sovereign's jurisdiction, and will remain intact unless surrendered in unmistakable  terms."  455 U. S., at 148.


141
Next, Bowen, supra, addressed Congress' repeal of a law that had  once allowed States which contracted to bring their employees into the  Federal Social Security System, to terminate  that agreement and their  participation upon due notice.  Bowen, therefore, considered not the  imposition of a tax as St. Louis and Merrion, but an amendment to a  statutory provision that existed as a background rule when and under  which the contracts were formed-much like this case.  The Bowen Court  repeated the quoted language from Merrion, and reminded that  "contractual arrangements, including those to which a sovereign itself  is a party, `remain subject to subsequent legislation' by the sovereign."  Bowen, supra, at 52 (quoting Merrion, supra, at 147).


142
Finally, we have Cherokee Nation, supra, in which the Court applied the unmistakability doctrine to a treaty, rather than a typical  contract.  Under the treaty the United States had granted to an Indian  tribe fee simple title to a riverbed.  The  Tribe claimed that the United  States had not reserved its navigational servitude and hence that the  Government's construction of a navigational channel that destroyed the  riverbed's mineral interests was a taking under the Fifth Amendment  without just compensation.  The Court ruled that the treaty had not  provided the Tribe an exemption from the navigational servitude, quoting from Bowen and Merrion the statement that "[s]uch a waiver of sovereign  authority will not  be implied, but instead must be `"surrendered in  unmistakable terms."'"  Cherokee Nation, supra, at 707.


143
These cases have stood until now for the well-understood proposition just quoted above-a waiver of sovereign authority will not  be implied, but instead must be surrendered in unmistakable terms.  Today, however, the plurality drastically limits the circumstances under  which the doctrine will apply by  drawing a distinction never before seen  in our caselaw.  The plurality tells us the unmistakability doctrine  will apply where a plaintiff either seeks injunctive relief to hold the  Government to its alleged surrender of sovereign authority (which  generally means granting the plaintiff an exemption to the changed law),  or seeks a damage award which would be "the equivalent of" such an injunction or exemption.  Ante, at 40.  But the doctrine will not apply  where a plaintiff seeks an award for damage caused by the exercise of  that sovereign authority.   We are told that if the alleged agreement is  not one to bind the Government to refrain from exercising regulatory  authority, but  is one to shift the risk of a change in regulatory rules,  the unmistakability doctrine does not apply.  And, perhaps more  remarkable, the plurality tells us that the Government will virtually  always have assumed this risk in the regulatory context, by operation of  law. Ante, at 29, 68.


144
The first problem with the plurality's formulation is a practical one. How do we know whether "the award of damages" will be  "the equivalent of [an] exemption," ante, at 40, before we assess the  damages?  In this case, for example, "there has been no demonstration  that awarding damages for breach would be tantamount" to an exemption to  the regulatory change, ante, at 41; and there has been no demonstration  to the contrary either. Thus we do not know in this very case whether  the award of damages would "amount to" an injunction, ante, at 43.  If  it did, under the plurality's theory, the unmistakability doctrine would apply, and that application may preclude respondents' claim.


145
But even if we could solve that problem by determining the damages before liability, and by finding the award to be some amount  other than the cost of an exemption, we would still be left with a  wholly unsatisfactory distinction.  Few, if any, of the plaintiffs in  the unmistakability-doctrine cases would have insisted on an injunction,  exemption, or their damage equivalent, if they had known they could have  avoided the doctrine by claiming the Government had agreed to assume the  risk, and asking for an award of damages for breaching that implied  agreement.  It is impossible to know the monetary difference between  such awards and, as the plurality suggests, the award for a breach of  the risk-shifting agreement may even be more generous.


146
The plurality's newly minted distinction is not only untenable,  but is contrary to our decisions in Cherokee Nation and Bowen.  The  Cherokee Nation sought damages and compensation for harm resulting from  the Government's navigational servitude. Cherokee Nation, 480 U. S., at  701.  Indeed, one of the Tribe's arguments, upheld by the Court of  Appeals, was that the United States could exercise its navigational  servitude under the treaty, but that the Tribe had a right to  compensation for any diminution in the value of its riverbed property.


147
Likewise, some of the plaintiffs in Bowen sought damages. They  sought just compensation for the revocation of their alleged contractual  right to terminate the employees' participation in the Social Security  Program.  The District Court in the decision which we reviewed in fact  commented, as this Court reported, that it found that the "`only  rational compensation would be reimbursement by the United States to the   State or public agencies, of the amount of money they currently pay to  the United States for their participation.'"  Bowen, 477  U. S., at 51 (quoting Public Agencies Opposed to Social Security Entrapment v. Heckler, 613 F. Supp. 558, 575 (ED Cal. 1985)).  It was only because the  District Court concluded that awarding this "measure of damages" was  contradictory to the will of Congress, that the court refrained from  making such an award  and instead simply declared the statutory amendment  unconstitutional.  477 U. S., at 51.  Neither Cherokee Nation nor Bowen  hinted that the unmistakability doctrines applied in their case because  the damages remedy sought "amount[ed] to" an injunction.  Ante, at 43.


148
In St. Louis, supra, the plaintiff railway companies did seek to  enjoin the enforcement of the tax by the city, and perhaps that case  fits neatly within the plurality's scaled-down version of the  unmistakability doctrine.  But sophisticated lawyers in the future,  litigating a claim exactly like the one in St. Louis, need only claim  that the sovereign implicitly agreed not to change their tax treatment,  and request damages for breach of that agreement.  There will presumably  be no unmistakability doctrine to contend with, and they will be in the  same position as if they had successfully enjoined the tax.  Such a  result has an Alice in Wonderland aspect to it, which suggests the distinction upon which it is based is a fallacious one.


149
The plurality justifies its novel departure from existing law by  noting that the contracts involved in the present case-unlike those in  Merrion, Bowen, and Cherokee Nation-"do not purport to bind the Congress  from enacting regulatory measures."  Ante, at 41.  But that is precisely  what the unmistakability doctrine, as a canon of construction, is  designed to determine:  Did the contract surrender the authority to enact  or amend regulatory measures as to the contracting party?  If the  sovereign did surrender its power unequivocally, and the sovereign  breached that agreement to surrender, then and only then would the issue of remedy for that breach arise.


150
The second reason the plurality advances for its limitation on  the unmistakability doctrine is that if it were applied to all actions  for damages, it would impair the Government's ability to enter into  contracts.  But the law is well established that Congress may not simply  abrogate a statutory provision obligating performance without breaching  the contract  and rendering itself liable for damages.  See Lynch v.  United States, 292 U. S. 571, 580 (1934); Bowen, supra, at 209.  Equally  well established, however, is that the sovereign does not shed its  sovereign powers just because it contracts.  See Providence  Bank v.  Billings, 4 Pet. 514, 565 (1830).  The Government's contracting  authority has survived from the beginning of the Nation with no  diminution in bidders, so far as I am aware, without the curtailment of  the unmistakability doctrine announced today.


151
The difficulty caused by the plurality's departure from existing  law is best shown by its own analysis of the contracts presently before  us. The plurality tells us first that "[n]othing in the documentation or  the circumstances of these transactions purported to bar the Government  from changing the way in which it regulated the thrift industry."  Ante,  at 28.  But, the plurality agrees with the finding of the Federal  Circuit, that "`[t]he Bank Board and the FSLIC were contractually bound  to recognize the supervisory goodwill and the amortization periods  reflected' in the agreements between the parties."  Ibid.59 From  this finding, the plurality goes on to say that "we read this promise as  the law of contracts has always treated promises to provide something  beyond the promisor's absolute control, that is, as a promise to insure  the promisee against loss arising from the promised condition's  nonoccurrence."  Ibid.  Then, in a footnote, the plurality concedes that  "[t]o be sure, each side could have eliminated any serious contest about   the correctness of their interpretive positions by using clearer  language." Ante, at 28, n. 15.


152
But if there is a "serious contest" about the correctness of their interpretive positions, surely the unmistakability doctrine-a  canon of construction-has a role to play in resolving that contest.  And  the plurality's reading of additional terms into the contract so that  the contract contains an unstated, additional promise to insure the  promisee against loss arising from the promised condition's  nonoccurrence seems the very essence of a promise implied in law, which  is not even actionable under the Tucker Act, rather than a promise  implied in fact, which is.  See Hercules v. United States, 516 U. S.  ___, ___ (1996).


153
At any rate, the unmistakability doctrine never comes into play,  according to the plurality, because we cannot know whether the damages  which could be recovered in later proceedings would be akin to a rebate  of a tax, and therefore the "equivalent of" an injunction.  This  approach tosses to the winds any idea of the unmistakability doctrine as  a canon of construction; if a canon of construction cannot come into  play until the contract has first been interpreted as to liability by an  appellate court, and remanded for computation of damages, it is no canon  of construction at all.


154
The plurality's search for some unifying theme for somewhat similar cases from Fletcher v. Peck, 6 Cranch 87, in 1810, to the present day is an interesting intellectual exercise, but its practical  fruit is inedible.

II.

155
The plurality also makes major changes in the existing sovereign  acts doctrine which render the doctrine a shell.  The plurality formally  acknowledges the classic statement of the doctrine in Horowitz v. United  States, 267 U. S. 458 (1925), quoting: "`[i]t has long been held by the  Court of Claims that the United States when sued as a contractor cannot  be held liable for an obstruction of the performance of the particular contract resulting from its public and general acts as a sovereign.'"  Ante, at 53 (quoting Horowitz, supra, at 461).  The plurality says that  this statement cannot be taken at face value, however, because it reads  "the essential point" of Horowitz to be "to put the Government in the  same position that  it would have enjoyed as a private contractor." Ante,  at 51; see also ante, at 54 (Horowitz emphasized "the need to treat the government-as-contractor the same as a private party").  But neither  Horowitz, nor the Court of Claims cases upon which it relies, confine  themselves to so narrow a rule.  As the quotations from them in the  plurality's opinion show, the early cases emphasized the dual roles of  Government, as contractor and as sovereign.  See, e.g., Deming v. United  States, 1 Ct. Cl. 190, 191 (1865) ("The United States as a contractor  are not responsible for the United States as a lawgiver"). By minimizing the role of lawgiver and expanding the role as private contractor, the  plurality has thus casually, but improperly, reworked the sovereign acts  doctrine.


156
The plurality further cuts into the sovereign acts doctrine by  defining the "public and general" nature of an act as depending on the  Government's motive for enacting it.  The new test is to differentiate  between "regulatory legislation that is relatively free of government  self-interest" and "statutes tainted by a governmental object of  self-relief."  Ante, at 58. We are then elevated to a higher  jurisprudential level by reference to the general philosophical  principles enunciated in Hurtado v. California, 110 U. S. 516, 535-536   (1884), that "[l]aw . . . must be not a special rule for a particular  person or a particular case, but. . .`the general law . . .' so `that every citizen shall hold his life, liberty, property and immunities  under the protection of the general rules which govern society.'"   Surely this marks a bold, if not brash, innovation in the heretofore  somewhat mundane law of Government  contracts; that law is now to be  seasoned by an opinion holding  that the Due Process Clause of the  Fourteenth Amendment did not  make applicable to the States the  requirement that a criminal proceeding be initiated by indictment of a  grand jury.


157
The plurality does not tell us, nor do these lofty jurisprudential principles inform us, how we are to decide whether a  particular statute is "free of governmental self-interest," on the one  hand, or "tainted by" a Government objective of "self-relief," on the  other.  In the normal sense of the word, any tax reform bill which  tightens or closes tax loopholes is directed to "government  self-relief," since it is designed to put more money into the public  coffers.  Be the act ever so general in its reform of the tax laws, it  apparently would not be a "sovereign act" allowing the Government to  defend against a claim by a taxpayer that he had received an  interpretation from the IRS that a particular type of income could  continue to be treated in accordance with existing statutes or  regulations.


158
But we are told "self-relief" is not, as one might expect, necessarily determined by whether the Government benefited financially  from the legislation.  For example, in this case the plurality  acknowledges that we do not know "the dollar value of the relief the  Government would obtain" if respondents had to comply with the modified  capital-infusion requirements.  Ante, at 61.  Rather the plurality  concludes that FIRREA, the law involved in this case, was "tainted by"  self-relief based on "the attention" that Congressmen "[gave] to the  regulatory contracts prior to passage" of the Act.  Ibid.


159
Indeed, judging from the plurality's use of comments of individual legislators in connection with the enactment of FIRREA, it  would appear that the sky is the limit so far as judicial inquiries into  the question of whether the statute was  "free of governmental  self-interest" or rather "tainted" by a government objective of  "self-relief."  It is difficult to imagine a more unsettling doctrine to  insert into the law of Government contracts.  By fusing the roles of the  Government as  lawgiver and as contractor-exactly what Horowitz warned  against  doing-the plurality makes some sort of legislative intent  critical in deciding these questions.  When it enacted FIRREA was the Government interested in saving its own money, or was it interested in  preserving the savings of those who had money invested in the failing  thrifts? I think it preferable, rather than either importing great  natural-law principles or probing legislators' intent to modify the  sovereign acts doctrine, to leave that law where it is.  Lynch stands  for the proposition that the congressional repeal of a statute  authorizing the payment of money pursuant to a contractual agreement is  a breach of that contract.  But, as the term "public and general"  implies, a more general regulatory enactment-whether it be the Legal Tender Acts involved in Deming, supra, or the embargo on shipments of  silk by freight involved in Horowitz-cannot by its enforcement give rise  to contractual liability on the part of the Government.


160
Judged by these standards, FIRREA was a general regulatory enactment. It is entitled "an act to reform, recapitalize, and consolidate the Federal deposit insurance system, to enhance the regulatory and enforcement powers of federal financial institutions  regulatory agencies, and for other purposes."  103 Stat. 183.  As the  plurality itself explains, "FIRREA made enormous changes in the  structure of federal thrift regulation by (1) abolishing FSLIC and  transferring its functions to other agencies; (2) creating a new thrift  deposit insurance fund under the [FDIC]; (3) replacing the Bank Board  with the Office of Thrift Supervision . . . ; and (4) establishing the  Resolution Trust Corporation (RTC) to liquidate or otherwise dispose of certain closed thrifts and their assets."  Ante, at 15 (emphasis added).  The Act occupies 372 pages in the Statutes at Large, and under 12  substantive titles contains more than 150 numbered sections.  Among  those sections are the ones involved in the present case.  Insofar as  this comprehensive enactment regulated the use of goodwill, it did so  without respect to how closely the savings association was regulated;  its provisions dealt with the right of any thrift association, after the  date of its enactment, to count intangible assets as capital.  See 12 U.  S.  C. Section(s) 1464(t)(1)(A), (2), (3), (9).  And by these provisions, the capital standards of thrifts were brought into line with those applicable to national banks.  See Section(s) 1464(t)(1)(C).  The plurality does not dispute that Congress, through this mammoth legislation, "acted to protect the public."  Ante, at 65.

III.

161
Justice Scalia finds that the unmistakability doctrine does apply to the contracts before us.  He explains that when the Government  is a contracting party, "it is reasonable to presume . . . that the  sovereign does not promise that none of its multifarious sovereign acts  . . . will incidentally disable it or the other party from performing,"  under the contract, "unless the contrary clearly appears."  Ante, at 3.  In other words, the sovereign's right to take subsequent action  continues "unless th[e] right has been specifically surrendered in terms  which admit of no other reasonable interpretation."  St. Louis, 210 U. S., at 280. Justice Scalia finds that the presumption has been rebutted  here; he, like Justice Breyer, finds that the Government had made a  promise that its subsequent action would not frustrate the contract.  Justice Scalia, however, finds that  obligation is contained implicitly  within the "promis[e] to regulate . . . in a particular fashion," and  the Government's consideration.  Ante, at 3-4.


162
But that is hardly what one normally thinks to be "unmistakable  terms."  Indeed, that promise plus consideration is no different than  what Justice Scalia says applies to private parties.  Ante, at 3.  The  Government has "promise[d] to do x in exchange for [respondents] doing  y," and in so doing "impliedly promise[d] not to do anything that   [would] disable [the Government] from doing x, or disable [respondents]  from doing y-so that if either of [the parties'] performances is  rendered impossible by such an act on [the Government's] part, [the Government] is not excused from [its] obligation."  Ibid. (emphasis  added).  But more than this is required for Government contracts, as  Justice Scalia had seemed to acknowledge.


163
His point about quid pro quo adds little, for it necessarily assumes that there has been a promise to provide a particular regulatory  treatment which cannot be affected by subsequent action, as opposed to a  promise to provide that treatment unless and until there is subsequent  action.  Ante, at 4.  But determining which promise the Government has  made is precisely what the unmistakability doctrine is designed to  determine.  If the Government agreed to treat the losses acquired by  respondents as supervisory goodwill in the short term, but made no  commitment about their regulatory treatment over the long term,  respondents still received consideration.  Such consideration would be especially valuable to an unhealthy thrift because it would provide "a  number of immediate benefits  to the acquiring thrift" that would stave  off foreclosure.  Brief for United States 27.


164
In addition, Justice Scalia does not himself make the findings  necessary for respondents to prevail, but relies on the findings of the  trial court and the Court of Appeals for the Federal Circuit with  respect to what the Government actually promised.  Ante, at 4.  But both  the trial court and the Court of Appeals held the unmistakability  doctrine did not apply here. Therefore, even under Justice Scalia's own  premises, these findings are insufficient because they were made under a  mistaken view of the applicable law.

IV.

165
Justice Breyer in his separate concurrence follows a different  route to the result reached by the plurality.  But even under his own  view of the law, he omits a necessary step in the reasoning required to  hold the Government liable.  He says that "the lower courts held that  each [respondent] proved the existence of an express promise by the  Government to grant them particular regulatory treatment for a period of  years."  Ante, at 4.  But the Government could have made that promise,  and not made the further promise to pay respondents in the event that  the regulatory regime changed.  Justice Breyer concludes that second promise did exist as a matter of fact, but he never makes that finding  himself.  Instead, he says that the "plurality's careful examination of  the circumstances reveals" that the Government did "inten[d] to make a  binding promise to hold the thrifts harmless from the effects of future  regulation (or legislation)."  Ante, at 9.  But the plurality's opinion  does not treat this as a question of fact at all, as Justice Breyer  does, but instead as something which occurs by operation of law.


166
Justice Breyer relies on this illusory factual finding while at  the same time commenting how implausible it would be for the Government  to have intended to insure against a change in the law.  He notes that  "it might seem unlikely" for the Government to make such a promise,  ibid., and further comments that because the contracting party is the  Government, it may be "far less likely that [the parties] intend[ed] to  make a promise that will oblige the Government to hold private parties  harmless in the event of a change in the law," ante, at 4.


167
The short of the matter is that Justice Breyer and Justice Scalia cannot reach their desired result, any more than the plurality  can, without changing the status of the Government to just another  private party under the law of contracts.  But 75 years ago Justice  Holmes, speaking for the Court in Rock Island, A. & L. R. Co. v. United  States, 254 U. S. 141, 143 (1920), said that "Men must turn square  corners when they deal with the Government."  The statement was repeated  in Federal Crop Ins. Corp. v. Merrill, 332 U. S. 380, 385 (1947).  The  wisdom of this principle arises, not from any ancient privileges of the sovereign, but from the necessity of protecting the federal fisc-and the  taxpayers who foot the bills-from possible improvidence  on the part of  the countless Government officials who must be authorized to enter into  contracts for the Government.

V.

168
A moment's reflection suggests that the unmistakability doctrine  and the sovereign acts doctrine are not entirely separate principles. To  the extent that the unmistakability doctrine is faithfully applied, the  cases will be rare in which close and debatable situations under the  sovereign acts doctrine are presented.  I do not believe that  respondents met either of these tests, and I would reverse the judgment  of the Court of Appeals for the Federal Circuit outright or remand to  that court for reconsideration in light of these tests as I have  enunciated them.



1
 The easing of federal regulatory requirements was  accompanied by similar initiatives on the state level, especially in California, Florida, and Texas.  The impact of these changes was substantial, since as of 1980 over 50 percent of federally-insured thrifts were chartered by the States. See House Report,  at 297.


2
 "Regulatory and statutory accounting gimmicks included permitting thrifts to defer losses from the sale of assets with below  market yields; permitting the use of income capital certificates,  authorized by Congress, in place of real capital; letting qualifying  mutual capital certificates be included as RAP capital; allowing FSLIC  members to exclude from liabilities in computing net worth, certain  contra-asset accounts, including loans in process, unearned discounts,  and deferred fees and credits; and permitting the inclusion of net worth  certificates, qualifying subordinated debentures and appraised equity  capital as RAP net worth."  House Report, at 298.  The result of these practices was that "[b]y 1984, the difference between RAP and GAAP net  worth at S&L's stood at $9 billion," which meant "that the industry's  capital position, or . . . its cushion to absorb losses was overstated  by $9 billion." Ibid.


3
 See also ibid. (noting that "[t]he FSLIC developed lists of prospective acquirers, made presentations, held seminars, and generally  tried to promote the acquisitions of these insolvents"); Grant, The  FSLIC: Protection through Professionalism, 14 Federal Home Loan Bank  Board Journal 9-10 (Feb. 1981) (describing the pros and cons of various default-prevention techniques from FSLIC's perspective).  Over 300 such  mergers occurred between 1980 and 1986, as opposed to only 48  liquidations.  GAO, Forbearance for Troubled Institutions 13. There is  disagreement as to whether the government actually saved money by  pursuing this course rather than simply liquidating the insolvent  thrifts.  Compare, e.g., Brief for Franklin Financial Group, Inc., et  al. as Amicus Curiae 7, quoting Remarks by H. Brent Beasley, Director of  FSLIC, before the California Savings and Loan League Management  Conference (Sept. 9, 1982) (concluding that FSLIC-assisted mergers have  "`[h]istorically . . . cost about 70% of [the] cost of liquidation'"),  with GAO, Solutions to the Thrift Industry Problem 52 ("FSLIC's cost  analyses may . . . understat[e] the cost of mergers to the government").


4
 See also Accounting Principles Board Opinion No. 17,  Para(s) 26, p. 339 (1970) (providing that "[i]ntangible assets acquired  . . . as part of an acquired company should . . . be recorded at cost,"  which for unidentifiable intangible assets like goodwill is "measured by  the difference between the cost of the . . . enterprise acquired and the  sum of the assigned costs of individual tangible and identifiable  intangible assets acquired less liabilities assumed").


5
 See Newark Morning Ledger Co. v. United States, 507 U. S.  546, 556 (1993) (describing "goodwill" as "the total of all the imponderable qualities that attract customers to the business"). Justice Story defined "good-will" somewhat more elaborately as "the  advantage or benefit, which is acquired by an establishment, beyond the  mere value of the capital, stock, funds, or property employed therein,  in consequence of the general public patronage and encouragement, which  it receives from constant or habitual customers, on account of its local  position, or common celebrity, or reputation for skill or affluence, or  punctuality, or from other accidental circumstances, or necessities, or  even from ancient partialities, or prejudices."  J. Story, Law of Partnership Section(s) 99, p. 139 (1841).


6
 See also 135 Cong. Rec. H2703 (daily ed. June 16, 1989) (statement of Rep. Hyde) (observing that FSLIC used goodwill as "an  inducement to the healthy savings and loans to merge with the sick  ones"); Brief of Franklin Financial Group, Inc., et al. as Amicus Curiae  9, quoting Deposition of Thurman Connell, former official at the Atlanta  Federal Home Loan Bank, in Charter Federal Savings Bank v. Office of  Thrift Supervision, Joint Appendix Nos. 91-2647, 91-2708 (CA4), p. 224   (recognizing that treating supervisory goodwill as regulatory capital  was "`a very important aspect of [the acquiring thrifts'] willingness to  enter into these agreements,'" and concluding that the regulators "`looked at [supervisory goodwill] as kind of the engine that made this  transaction go.  Because without it, there wouldn't have been any train  pulling out of the station, so to speak'").


7
 In this context, "amortization" of an intangible asset is equivalent to depreciation of tangible assets.  See Newark Morning Ledger Co. v. United States, 507 U. S., at 571, n. 1 (1993) (Souter, J.,  dissenting); Gregorcich, Amortization of Intangibles: A Reassessment of  the Tax Treatment of Purchased Goodwill, 28 Tax Lawyer 251, 253 (1975).  Both the majority opinion and dissent in Newark Morning Ledger agreed  that "goodwill" was not subject to depreciation (or amortization) for federal tax purposes, see 507 U. S., at 565, n. 13; id., at 573 (Souter,  J., dissenting), although we disagreed as to whether one could  accurately estimate the useful life of certain elements of goodwill and,  if so, permit depreciation of those elements under Internal Revenue  Service regulations.  Id., at 566-567; id., at 576-577 (Souter, J.,  dissenting). Neither of the Newark Morning Ledger opinions, however,  denied the power of another federal agency, such as the Bank Board or  FSLIC, to decide that goodwill is of transitory value and impose a  particular amortization period to be used for its own regulatory  purposes.


8
 See also National Commission on Financial Institution  Reform, Recovery and Enforcement, Origins and Causes of the S&L Debacle: A Blueprint for Reform, A Report to the President and Congress of the  United States 38-39 (July 1993) (explaining the advantages of different  amortization and accretion schedules to an acquiring thrift).  The  downside of a faster accretion schedule, of course, was that it  exhausted the discount long before the goodwill asset had been fully  amortized.  As a result, this treatment resulted in a net drag on  earnings over the medium and long terms.  See Lowy 40-41; Black, Ending  Our Forebearers' Forbearances: FIRREA and Supervisory Goodwill, 2 Stan.  L. & Policy Rev. 102, 104-105 (1990).  Many thrift managers were  apparently willing to take the short term gain, see Lowy 40-41, and  others sought to stave off the inevitable losses by pursuing further  acquisitions, see Black, supra, at 105.


9
 The 1981 regulations quoted above were in effect at the  time of the Glendale transaction.  The 1984 regulations relevant to the Winstar transaction were identical in all material respects, and although substantial changes had been introduced into Section(s) 563.13  by the time of the Statesman merger in 1988, they do not appear to  resolve the basic ambiguity as to whether goodwill could qualify as  regulatory capital. See 12 CFR Section(s) 563.13 (1988).  Section 563.13  has since been superseded by the Financial Institutions Reform,  Recovery, and Enforcement Act.


10
 Although the Glendale transaction in this case occurred  before the promulgation of SFAS 72 in 1983, the proper amortization period for goodwill under GAAP was uncertain prior to that time. According to one observer, "when the accounting profession designed the  purchase accounting rules in the early 1970s, they didn't anticipate the  case of insolvent thrift institutions . . . .  The rules for that  situation were simply unclear until September 1982," when the SFAS 72  rules were first aired.  Lowy 39-40.


11
 See 135 Cong. Rec. 18863 (1989) (Sen. Riegle) (emphasizing that these capital requirements were at the "heart" of the legislative  reform); id., at 18860 (Sen. Chafee) (describing capital standards as  FIRREA's "strongest and most critical requirement" and "the backbone of  the legislation"); id., at 18853 (Sen. Dole) (describing the "[t]ough  new capital standards [as] perhaps the most important provisions in this  bill").


12
 Glendale's premerger net worth amounted to 5.45 percent of  its total assets, which comfortably exceeded the 4 percent capital/asset  ratio, or net worth requirement, then in effect. See 12 CFR Section(s)  563.13(a)(2) (1981).


13
 See also Appleby v. Delaney, 271 U. S. 403, 413 (1926)  ("It is not reasonable to suppose that the grantees would pay $12,000  . . . and leave to the city authorities the absolute right completely to  nullify the chief consideration for seeking this property, . . . or that  the parties then took that view of the transaction").


14
 As part of the contract, the Government's promise to count supervisory goodwill and capital credits toward regulatory capital was  alterable only by written agreement of the parties.  See App. 408.  This  was also true of the Glendale and Winstar transactions.  See id., at  112, 600.


15
 To be sure, each side could have eliminated any serious contest about the correctness of their interpretive positions by using  clearer language.  See, e.g., Guaranty Financial Services, Inc. v. Ryan,  928 F. 2d 994, 999-1000 (CA11 1991) (finding, based on very different  contract language, that the Government had expressly reserved the right  to change the capital requirements without any responsibility to the  acquiring thrift).  The failure to be even more explicit is perhaps more  surprising here, given the size and complexity of these transactions.  But few contract cases would be in court if contract language had  articulated the parties' postbreach positions as clearly as might have  been done, and the failure to specify remedies in the contract is no  reason to find that the parties intended no remedy at all.  The Court of Claims and Federal Circuit were thus left with the familiar task of  determining which party's interpretation was more nearly supported by  the evidence.


16
 See also Day v. United States, 245 U. S. 159, 161 (1917) (Holmes, J.) ("One who makes a contract never can be absolutely certain  that he will be able to perform it when the time comes, and the very  essence of it is that he takes the risk within the limits of his  undertaking").


17
 See, e.g., Hughes Communications Galaxy, Inc. v. United States, 998 F. 2d 953, 957-959 (CA Fed. 1993) (interpreting contractual  incorporation of then-current government policy on space shuttle  launches not as a promise not to change that policy, but as a promise  "to bear the cost of changes in launch priority and scheduling resulting  from the revised policy"); Hills Materials Co. v. Rice, 982 F. 2d 514,  516-517 (CA Fed. 1992) (interpreting contract to incorporate safety  regulations extant when contract was signed and to shift responsibility  for costs incurred as a result of new safety regulations to the Government); see generally 18 W. Jaeger, Williston on Contracts Section(s) 1934, at 19-21 (3d ed. 1978) ("Although a warranty in effect  is a promise to pay damages if the facts are not as warranted, in terms  it is an undertaking that the facts exist.  And in spite of occasional statements that an agreement impossible in law is void there seems no  greater difficulty in warranting the legal possibility of a performance  than its possibility in fact . . . .  [T]here seems no reason of policy  forbidding a contract to perform a certain act legal at the time of the  contract if it remains legal at the time of performance, and if not  legal, to indemnify the promisee for non-performance" (footnotes  omitted)); 5A A. Corbin, Corbin on Contracts Section(s) 1170, p. 254   (1964) (noting that in some cases where subsequent legal change renders  contract performance illegal, "damages are still available as a remedy,  either because the promisor assumed the risk or for other reasons," but  specific performance will not be required).


18
 See also H. L. A. Hart, The Concept of Law 145 (1961) (recognizing that Parliament is "sovereign, in the sense that it is  free, at every moment of its existence as a continuing body, not only  from legal limitations imposed ab extra, but also from its own prior  legislation").


19
 See also Reichelderfer v. Quinn, 287 U. S. 315, 318 (1932) ("[T]he will of a particular Congress . . . does not impose itself upon  those to follow in succeeding years"); Black, Amending the Constitution:  A Letter to a Congressman, 82 Yale L. J. 189, 191 (1972) (characterizing  this "most familiar and fundamental principl[e]" as "so obvious as  rarely to be stated").


20
 See also Stone v. Mississippi, 101 U. S. 814 (1880) (State  may not contract away its police power); Butchers' Union Slaughter-House  & Livestock Landing Co. v. Crescent City Livestock Landing &  Slaughterhouse Co., 111 U. S. 746 (1884) (same); see generally Griffith,  Local Government Contracts: Escaping from the Governmental/Proprietary  Maze, 75 Iowa L. Rev. 277, 290-299 (1990) (recounting the early  development of the reserved powers doctrine).  We discuss the  application of the reserved powers doctrine to this case infra, at  49-50.


21
 United Railways is in the line of cases stretching back to Providence Bank v. Billings, 4 Pet. 514 (1830), and Charles River Bridge  v. Warren Bridge, 11 Pet. 420 (1837).  Justice Day's opinion in United  Railways relied heavily upon New Orleans City & Lake R. Co. v. New  Orleans, 143 U. S. 192 (1892), which in turn relied upon classic  Contract Clause unmistakability cases like Vicksburg S. & P. R. Co. v.  Dennis, 116 U. S. 665 (1886), Memphis Gas Light Co. v. Taxing Dist. of  Shelby Cty., 109 U. S. 398 (1883), and Piqua Branch of State Bank of  Ohio v. Knoop, 16 How. 369 (1854). And Home Building & Loan Assn. v.  Blaisdell, 290 U. S. 398 (1934), upon which Merrion also relied, cites  Charles River Bridge directly.  See 290 U. S., at 435; see also Note, Forbearance Agreements: Invalid Contracts for the Surrender of Sovereignty, 92 Colum. L. Rev. 426, 453 (1992) (linking the unmistakability principle applied in Bowen v. Public Agencies Opposed to  Social Security Entrapment, 477 U. S. 41 (1986), to the Charles River  Bridge/Providence Bank line of cases).


22
 "Sovereign power" as used here must be understood as a  power that could otherwise affect the Government's obligation under the contract. The Government could not, for example, abrogate one of its  contracts by a statute abrogating the legal enforceability of that  contract, government contracts of a class including that one, or simply  all government contracts.  No such legislation would provide the  Government with a defense under the sovereign acts doctrine, see infra,  at 52-61.


23
 The Government's right to take the tribe's property upon payment of compensation, of course, did not depend upon the navigational  servitude; where it applies, however, the navigational easement  generally obviates the obligation to pay compensation at all.  See,  e.g., United States v. Kansas City Ins. Co., 339 U. S. 799, 808 (1950)  ("When the Government exercises [the navigational] servitude, it is  exercising its paramount power in the interest of navigation, rather  than taking the private property of anyone"); Scranton v. Wheeler, 179  U. S. 141, 163 (1900) ("Whatever the nature of the interest of a riparian owner in the submerged lands in front of his upland bordering  on a public navigable water, his title is not as full and complete as  his title to fast land which has no direct connection with the  navigation of such water.  It is a qualified title . . . to be held at  all times subordinate to such use of the submerged lands and of the  waters flowing over them as may be consistent with or demanded by the  public right of condemnation").  Because an order to pay compensation  would have placed the Government in the same position as if the  navigational easement had been surrendered altogether, the holding of  Cherokee Nation is on all fours with the approach we describe today.


24
 The dissent is mistaken in suggesting there is question-begging in speaking of what a government contract provides  without first applying the unmistakability doctrine, see post, at 6.  A  contract may reasonably be read under normal rules of construction to  contain a provision that does not satisfy the more demanding standard of  unmistakable clarity. If an alleged term could not be discovered under  normal standards, there would be no need for an unmistakability  doctrine.  It would, of course, make good sense to apply the  unmistakability rule if it was clear from the start that a contract  plaintiff could not obtain the relief sought without effectively barring  exercise of a sovereign power, as in the example of the promisee of the  tax exemption who claims a rebate.


25
 See also Hughes Communications Galaxy, Inc. v. United  States, 998 F. 2d, at 958 (finding the unmistakability doctrine inapplicable to "the question of how liability for certain contingencies  was allocated by the contract"); Sunswick Corp. v. United States, 109  Ct. Cl. 772, 798, 775 F. Supp. 221, 228 ("We know of no reason why the  Government may not by the terms of its contract bind itself for the  consequences of some act on its behalf which, but for the contract,  would be nonactionable as an act of the sovereign.  As shown in Bostwick  v. United States, 94 U. S. 53, 69 [(1877)], the liability of the  Government in such circumstances rests upon the contract and not upon  the act of the Government in its sovereign capacity"), cert. denied, 334  U. S. 827 (1948); see generally Eule, Temporal Limits on the Legislative Mandate: Entrenchment and Retroactivity, 1987 Am. Bar Found. Research J.  379, 424 (observing that limiting the Government's obligation to  "compensating for the financial losses its repudiations engender . . . .  affords the current legislature the freedom to respond to constituents'  needs, while at the same time protecting those whose contractual  interests are impaired"); Note, A Procedural Approach to the Contract  Clause, 93 Yale L. J. 918, 928-929 (1984) ("A damage remedy is superior  to an injunction because damages provide the states with the flexibility to impair contracts retroactively when the benefits exceed the costs.  So long as the victims of contract impairments are made whole through  compensation, there is little reason to grant those victims an  injunctive remedy").


26
 This point underscores the likelihood that damage awards  will have the same effect as an injunction only in cases, like Bowen, where a private party seeks the return of payments to the Government.  The classic examples, of course, are tax cases like St. Louis v. United  Railways Co., 210 U. S. 266 (1908).  Because a request for rebate  damages in that case would effectively have exempted the plaintiffs from  the law by forcing the reimbursement of their tax payments, the dissent is quite wrong to suggest, see post, at 5-6, that the plaintiffs could  have altered the outcome by pleading their case differently.


27
 See Posner & Rosenfield, Impossibility and Related  Doctrines in Contract Law: An Economic Analysis, 6 J. Leg. Stud. 83,  88-89 (1977) (noting that parties generally rely on contract law "to reduce the costs of contract negotiation by supplying contract terms  that the parties would probably have adopted explicitly had they  negotiated over them").


28
 See also Bowen v. Public Agencies Opposed to Social  Security Entrapment, 477 U. S., at 52 ("[T]he Federal Government, as sovereign, has the power to enter contracts that confer vested rights,  and the concomitant duty to honor those rights . . ."); Perry v. United  States, 294 U. S. 330, 353 (1935) ("[T]he right to make binding  obligations is a competence attaching to sovereignty"); cf. H. L. A.  Hart, The Concept of Law 145-146 (1961) (noting that the ability to  limit a body's future authority is itself one aspect of sovereignty).


29
 See also Logue, Tax Transitions, Opportunistic  Retroactivity, and the Benefits of Government Precommitment, 94 Mich. L.  Rev. 1129, 1146 (1996) ("If we allowed the government to break its contractual promises without having to pay compensation, such a policy  would come at a high cost in terms of increased default premiums in  future government contracts and increased disenchantment with the  government generally").


30
 See, e.g., Restatement (Second) of Contracts Section(s)  346, cmt. a ("Every breach of contract gives the injured party a right to damages against the party in breach" unless "[t]he parties . . . by  agreement vary the rules"); 3 Farnsworth on Contracts Section(s) 12.8,  at 185 (1990) ("The award of damages is the common form of relief for  breach of contract.  Virtually any breach gives the injured party a  claim for damages").


31
 The dissent justifies its all-devouring view of unmistakability not by articulating any limit, but simply by reminding  us that "Men must turn square corners when they deal with the  Government."  Post, at 14-15 (quoting Rock Island, A. & L.R. Co. v.  United States, 254 U. S. 141, 143 (1920) (Holmes, J.)).  We have also  recognized, however, that "`[i]t is no less good morals and good law  that the Government should turn square corners in dealing with the  people than that the people should turn square corners in dealing with  their government.'"  Heckler v. Community Health Services of Crawford  County, Inc., 467 U. S. 51, 61 n. 13 (1984) (quoting St. Regis Paper Co.  v. United States, 368 U. S. 208, 229 (1961) (Black, J., dissenting).  See also Federal Crop Insurance Corp. v. Merrill, 332 U. S. 380, 387-388   (1947) (Jackson, J., dissenting) ("It is very well to say that those who  deal with the Government should turn square corners.  But there is no  reason why the square corners should constitute a one-way street").


32
 Justice Scalia offers his own theory of unmistakability,  see post, at 1-5, which would apply in a wide range of cases and so create some tension with the general principle that the Government is  ordinarily treated just like a private party in its contractual  dealings, see, e.g., Perry v. United States, 294 U. S. 330, 352 (1935),  but which would be satisfied by an inference of fact and therefore offer  a only a low barrier to litigation of constitutional issues if a party  should, in fact, prove a governmental promise not to change the law.  Justice Scalia seeks to minimize the latter concern by quoting Holmes's  pronouncement on damages as the exclusive remedy at law for breach of  contract, see post, at 2, but this ignores the availability of specific  performance in a non-trivial number of cases, see, e.g., Restatement   (Second) of Contracts Section(s) 357-359, including the Contract Clause  cases in which the unmistakability doctrine itself originated.  See, e.g., Carter v. Greenhow, 114 U. S. 317, 322 (1885) (stating that "the  only right secured" by the Contract Clause is "to have a judicial  determination, declaring the nullity of the attempt to impair [the  contract's] obligation"); Zigler, Takings Law and the Contract Clause: A  Takings Law Approach to Legislative Modifications of Public Contracts,  36 Stan. L. Rev. 1447, 1462 (1984) (suggesting that "analysis under the  contract clause is limited to declaring the statute unconstitutional.  The provision does not authorize the courts to award damages in lieu of requiring the state to adhere to the original terms of the contract");  cf. C. Fried, Contract as Promise 117-118 (1981) (arguing that "Holmes's  celebrated dictum . . . goes too far, is too simple").  Finally, we have  no need to consider the close relationship that Justice Scalia sees  between the unmistakability and sovereign acts doctrines, see post, at  6, because, even considered separately, neither one favors the  Government in this case.


33
 See also Atlantic Coast Line R. Co. v. Goldsboro, 232 U.  S. 548, 558 (1914) ("[T]he power of the State to establish all regulations that are reasonably necessary to secure the health, safety,  good order, comfort, or general welfare of the community . . . can  neither be abdicated nor bargained away, and is inalienable even by  express grant"); West River Bridge Co. v. Dix, 6 How. 507 (1848)  (State's contracts do not relinquish its eminent domain power).


34
 To the extent that Justice Scalia finds the reserved  powers doctrine inapplicable because "the private party to the contract does not seek to stay the exercise of sovereign authority, but merely  requests damages for breach of contract," post, at 5, he appears to  adopt a distinction between contracts of indemnity and contracts not to  change the law similar to the unmistakability analysis he rejects.  He  also suggests that the present case falls outside the "core governmental  powers" that cannot be surrendered under the reserved powers doctrine,  but this suggestion is inconsistent with our precedents.  See Stone v. Mississippi, 101 U. S. 814, 817 (1880) ("[T]he legislature cannot bargain away the police power of a State"); Veix v. Sixth Ward Building  & Loan Assn. of Newark, 310 U. S. 32, 38 (1940) (recognizing that thrift  regulation is within the police power).


35
 See Speidel, Implied Duties of Cooperation and the Defense  of Sovereign Acts in Government Contracts, 51 Geo. L. J. 516, 542 (1963)  ("[W]hile the contracting officers of Agency X cannot guarantee that the  United States will not perform future acts of effective government, they  can agree to compensate the contractor for damages resulting from  justifiable acts of the United States in its `sovereign capacity'"   (footnotes omitted)).


36
 See also 1 R. Nash & J. Cibinic, Federal Procurement Law 5 (3d ed. 1977) ("The authority of the executive to use contracts in carrying out authorized programs is . . . generally assumed in the absence of express statutory prohibitions or limitations").


37
 Nor is there any substance to the claim that these were contracts that only the Government could make.  The regulatory capital  or net worth requirements at issue applied only to thrifts choosing to  carry federal deposit insurance, see Federal Home Loan Bank System, A  Guide to the Federal Home Loan Bank System 69 (5th ed. 1987), and institutions choosing to self-insure or to seek private insurance elsewhere would have been free to make similar agreements with private  insurers.


38
 Moreover, if the dissent were correct that the sovereign  acts doctrine permits the Government to abrogate its contractual commitments in "regulatory" cases even where it simply sought to avoid  contracts it had come to regret, then the Government's sovereign  contracting power would be of very little use in this broad sphere of  public activity.  We rejected a virtually identical argument in Perry v.  United States, 294 U. S. 330 (1935), in which Congress had passed a  resolution regulating the payment of obligations in gold.  We held that  the law could not be applied to the Government's own obligations, noting  that "the right to make binding obligations is a competence attaching to sovereignty." Id., at 353.


39
 See also Clearfield Trust Co. v. United States, 318 U. S.  363, 369 (1943) ("`The United States does business on business terms'") (quoting United States v. National Exchange Bank of Baltimore, 270 U. S.  527, 534 (1926)); Perry v. United States, supra, at 352 (1935) ("When  the United States, with constitutional authority, makes contracts, it  has rights and incurs responsibilities similar to those of individuals  who are parties to such instruments.  There is no difference . . .  except that the United States cannot be sued without its consent")   (citation omitted); United States v. Bostwick, 94 U. S. 53, 66 (1877)  ("The United States, when they contract with their citizens, are  controlled by the same laws that govern the citizen in that behalf");  Cooke v. United States, 91 U. S. 389, 398 (1875) (explaining that when the United States "comes down from its position of sovereignty, and  enters the domain of commerce, it submits itself to the same laws that  govern individuals there").


40
 See Jones, 1 Cl. Ct., at 85 ("Wherever the public and  private acts of the government seem to commingle, a citizen or corporate body must by supposition be substituted in its place, and then the question be determined whether the action will lie against the supposed  defendant"); O'Neill v. United States, 231 Ct. Cl. 823, 826 (1982)  (sovereign acts doctrine applies where, "[w]ere [the] contracts  exclusively between private parties, the party hurt by such governing  action could not claim compensation from the other party for the  governing action").  The dissent ignores these statements (including the  statement from Jones, from which case Horowitz drew its reasoning  literally verbatim), when it says, post, at [7], that the sovereign acts  cases do not emphasize the need to treat the government-as-contractor  the same as a private party.


41
 Our Contract Clause cases have demonstrated a similar  concern with governmental self-interest by recognizing that "complete deference to a legislative assessment of reasonableness and necessity is  not appropriate because the State's self-interest is at stake." United  States Trust Co. of N. Y. v. New Jersey, 431 U. S. 1, 26 (1977); see  also Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U. S.  400, 412-413, and n. 14 (1983) (noting that a stricter level of scrutiny  applies under the Contract Clause when a State alters its own  contractual obligations); cf. Perry, supra, at 350-351 (drawing a "clear distinction" between Congress's power over private contracts and "the  power of the Congress to alter or repudiate the substance of its  ownengagements").


42
 The generality requirement will almost always be met  where, as in Deming, the governmental action "bears upon [the  government's contract] as it bears upon all similar contracts between citizens."  Deming v. United States, 1 Ct. Cl. 190, 191 (1865). Deming  is less helpful, however, in cases where, as here, the public contracts  at issue have no obvious private analogs.


43
 The dissent accuses us of transplanting this due process principle into alien soil, see post, at 9.  But this Court did not even  wait until the term following Hurtado before applying its principle of  generality to a case that, like this one, involved the deprivation of  property rights.  See Hagar v. Reclamation Dist. No. 108, 111 U. S. 701,  708 (1884).  More importantly, it would be surprising indeed if the  sovereign acts doctrine, resting on the inherent nature of sovereignty,  were not shaped by fundamental principles about how sovereigns ought to  behave.


44
 See also Speidel, 51 Geo. L. J., at 539-540 (observing  that "the commonly expressed conditions to the availability of the sovereign acts defense" are not only that "the act . . . must have been  `public and general,'" but also that "the damage to the contractor must  have been caused indirectly"); cf. Exxon Corp. v. Eagerton, 462 U. S.  176, 191-192 (1983) (distinguishing between direct and incidental  impairments under the Contract Clause).


45
 Cf. also Resolution Trust Corp. v. Federal Savings and  Loan Insurance Corp., 25 F.3d 1493, 1501 (CA10 1994) ("The limits of this immunity [for sovereign acts] are defined by the extent to which  the government's failure to perform is the result of legislation  targeting a class of contracts to which it is a party"); South Louisiana  Grain Services, Inc. v. United States, 1 Cl. Ct. 281, 287, n. 6 (1982)  (rejecting sovereign acts defense where the government agency's actions  "were directed specifically at plaintiff's alleged contract  performance").  Despite the dissent's predictions, the sun is not, in  fact, likely to set on the sovereign acts doctrine.  While an increase  in regulation by contract will produce examples of the "fusion" that  bars the defense, we may expect that other sovereign activity will continue to occasion the sovereign acts defense in cases of incidental  effect.


46
 A different intermediate position would be possible, at  least in theory.  One might say that a governmental action was not "public and general" under Horowitz if its predominant purpose or effect  was avoidance of the Government's contractual commitments. The  difficulty, however, of ascertaining the relative intended or resulting  impacts on governmental and purely private contracts persuades us that  this test would prove very difficult to apply.


47
 We note that whether or not Congress intended to abrogate supervisory merger agreements providing that supervisory goodwill would  count toward regulatory capital requirements has been the subject of  extensive litigation in the Courts of Appeals, and that every Circuit to  consider the issue has concluded that Congress did so intend.  See  Transohio Sav. Bank v. Director, Office of Thrift Supervision, 967 F. 2d  598, 617 (CADC 1992); Carteret Sav. Bank v. Office of Thrift  Supervision, 963 F. 2d 567, 581-582 (CA3 1992); Security Sav. & Loan v.  Director, Office of Thrift Supervision, 960 F. 2d 1318, 1322 (CA5 1992);  Far West Federal Bank v. Director, Office of Thrift Supervision, 951 F.  2d 1093, 1098 (CA9 1991); Guaranty Financial Services, Inc. v. Ryan, 928  F. 2d 994, 1006 (CA11 1991); Franklin Federal Sav. Bank v. Director,  Office of Thrift Supervision, 927 F. 2d 1332, 1341 (CA6), cert. denied,  502 U. S. 937 (1991); cf. Resolution Trust Corp. v. FSLIC, 25 F. 3d  1493, 1502 (CA10 1994) (observing that "FIRREA's structure leaves little doubt that Congress well knew the crippling effects strengthened capital  requirements would have on mergers that relied on supervisory goodwill,"  but concluding that Congress sought to mitigate the impact by giving OTS  authority to exempt thrifts until 1991); Charter Federal Sav. Bank v.  Office of Thrift Supervision, 976 F. 2d 203, 210 (CA4 1992) (accepting  the conclusions of the other Circuits in dictum), cert. denied, 507 U. S. 1004 (1993).


48
 See also House Report, at 534 (additional views of Reps. Hiler, Ridge, Bartlett, Dreier, McCandless, Saiki, Baker, and Paxon)  ("For the institutions with substantial supervisory goodwill, the bill  radically changes the terms of previously negotiated transactions");  id., at 507-508 (additional views of Rep. LaFalce) ("Those institutions  which carry intangible assets on their books do so generally under  written agreements they have entered into with the U. S. government,  agreements which generally state that they cannot be superseded by  subsequent regulations"); id., pt. 5, at 27 (additional views of Rep.  Hyde) ("[Thrifts] were told that they would be able to carry this goodwill on their books as capital for substantial periods of time. . .  The courts could well construe these agreements as formal contracts.  Now, . . . Congress is telling these same thrifts that they cannot count  this goodwill toward meeting the new capital standards"); 135 Cong. Rec.  H2706 (June 15, 1989) (statement of Rep. Crane) (FIRREA "would require  these S&Ls to write off this goodwill in a scant 5 years.  This  legislation violates the present agreements that these institutions made  with the Federal Government").  Although there was less of a focus on the impact of FIRREA on supervisory goodwill in the Senate, at least two  senators noted that the new capital requirements would have the effect  of abrogating government contracts.  See id., at S5533 (May 17, 1989)  (statement of Sen. Hatfield) ("The new tangible capital standards in the  legislation specifically exclude supervisory goodwill, and in doing so  effectively abrogate agreements made between the Federal Home Loan Bank Board, on behalf of the U. S. Government, and certain healthy thrift  institutions"); id., at S10213 (Aug. 4, 1989) (statement of Sen.  D'Amato) (asking "whether any future transactions involving failed or  failing institutions will be possible after this bill sanctions a  wholesale reneging of Federal agency agreements").


49
 See also House Report, at 545 (Supplemental Views of Reps. Schumer, Morrison, Roukema, Gonzalez, Vento, McMillen and Hoagland)  ("[A]n overriding public policy would be jeopardized by the continued  adherence to arrangements which were blithely entered into by the  FSLIC"); 135 Cong. Rec. H2705 (June 15, 1989) (statement of Rep.  Gonzalez) ("[I]n blunt terms, the Bank Board and FSLIC insurance fund  managers entered into bad deals-I might even call them steals"); id., at  H2565 (June 14, 1989) (statement of Rep. Saxton) ("In short[,] goodwill  agreements were a mistake and as the saying goes . . . `Two wrongs don't  make a right'"). These proponents defeated two amendments to FIRREA,  proposed by Reps. Quillen and Hyde, which would have given thrifts that  had received capital forbearances from thrift regulators varying degrees  of protection from the new rules.  See Transohio Sav. Bank v. Director,  Office of Thrift Supervision, supra, at 616-617; see also 135 Cong. Rec.  H2710 (June 15, 1989) (statement of Rep. Price) ("[T]he proponents of   [the Hyde] amendment say a `Deal is a Deal' . . . .  But to claim that  Congress can never change a regulator's decision . . . in the future is  simply not tenable"); Franklin Federal Savings Bank v. Director, Office  of Thrift Supervision, supra, at 1340-1341 (reviewing the House debate  and concluding that "[n]obody expressed the view that FIRREA did not  abrogate forbearance agreements regarding supervisory goodwill")   (emphasis in original).


50
 Despite the claims of the dissent, our test does not turn  upon "some sort of legislative intent," post, at 10.  Rather, we view Congress's expectation that the Government's own obligations would be  heavily affected simply as good evidence that this was, indeed, the  case.


51
 We have, indeed, had to reject a variant of this argument before. See Lynch v. United States, 292 U. S. 571, 580 (1934) (acknowledging a public need for governmental economy, but holding that  "[t]o abrogate contracts, in the attempt to lessen governmental  expenditure, would be not the practice of economy, but an act of  repudiation"); see also Speidel, 51 Geo. L.J., at 522 (noting that even  when "the Government's acts are motivated or required by public  necessity . . . [t]he few decisions on point seem to reject public  convenience or necessity as a defense, particularly where [the  Government's action] directly alters the terms of the contract").


52
 The dissent contends that FIRREA must be a "public and general" act because it "occupies 372 pages in the Statutes at Large,  and under 12 substantive titles contains more than 150 numbered  sections."  Post, at 11.  But any act of repudiation can be buried in a  larger piece of legislation, and if that is enough to save it then the  Government's contracting power will not count for much.  To the extent  that The Chief Justice relies on the fact that FIRREA's core capital  requirements applied to all thrift institutions, we note that neither he  nor the Government has provided any indication of the relative incidence  of the new statute in requiring capital increases for thrifts subject to regulatory agreements affecting capital and those not so subject.


53
 See also Transatlantic Financing Corp. v. United States,  363 F. 2d 312, 315 (CADC 1966) (requiring that the contingency rendering  performance impossible be "`something' unexpected"); Companhia de  Navegacao Lloyd Brasiliero v. C. G. Blake Co., 34 F. 2d 616, 619 (CA2  1929) (L. Hand, J.) (asking "how unexpected at the time [the contract  was made] was the event which prevented performance"); see also Kel Kim  Corp. v. Central Markets, Inc., 70 N. Y. 2d 900, 902, 524 N. E. 2d 295,  296 (1987) ("[T]he impossibility must be produced by an unanticipated  event that could not have been foreseen or guarded against in the contract"); Barbarossa and Sons, Inc. v. Iten Chevrolet, Inc., 265 N. W.  2d 655, 659 (Minn. 1978) (asking "whether the risk of the given  contingency was so unusual or unforeseen and would have such severe  consequences that to require performance would be to grant the promisee  an advantage for which he could not be said to have bargained in making  the contract"); Mishara Construction Co. v. Transit-Mixed Concrete  Corp., 365 Mass. 122, 129, 310 N. E. 2d 363, 367 (1974) ("The question  is . . . Was the contingency which developed one which the parties could  reasonably be thought to have foreseen as a real possibility which could  affect performance?"); Krell v. Henry, 2 K. B. 740, 752 (1903) ("The test seems to be whether the event which causes the impossibility was or  might have been anticipated and guarded against"); 18 W. Jaeger,  Williston on Contracts Section(s) 1931, p. 8 (3d ed. 1978) ("The  important question is whether an unanticipated circumstance has made  performance of the promise vitally different from what should reasonably  have been within the contemplation of both parties when they entered  into the contract.  If so, the risk should not fairly be thrown upon the promisor").  Although foreseeability is generally a relevant, but not  dispositive, factor, see 2 E. Farnsworth, Farnsworth on Contracts  Section(s) 9.6, pp. 555-556 (1990); Opera Company of Boston, Inc. v.  Wolf Trap Foundation for the Performing Arts, 817 F. 2d 1094, 1101 (CA4  1987), there is no reason to look further where, as here, the risk was  foreseen to be more than minimally likely, went to the central purpose  of the contract, and could easily have been allocated in a different  manner had the parties chosen to do so, see id., at 1099-1102; 18  Williston on Contracts, supra, Section(s) 1953, at 119.


54
 The Government confirmed this point at oral argument.  When asked whether FIRREA's tightening of the regulatory capital standards was "exactly the event that the parties assumed might hap-pen  when they made their contracts," the Government responded "Exactly.  Congress had changed capital standards many times over the years."  Tr.  of Oral Arg. 9.


55
 See, e.g., Garn-St Germain Depository Institutions Act of 1982, Pub. L. 97-320, 96 Stat. 1469 (eliminating any fixed limits to  Bank Board discretion in setting reserve requirements); Depository  Institutions Deregulation and Monetary Control Act of 1980, Pub. L.  96-221, 94 Stat. 132, 160 (conferring discretionary authority on the  Bank Board to set reserve requirements between 3% and 6%); 47 Fed. Reg.  3543 (lowering the reserve ratio from 4% to 3%); id., at 31859   (excluding certain "contra-asset" accounts from reserve calculations);  id., at 52961 (permitting thrifts to count appraised equity capital  toward reserves); see also Charter Federal Sav. Bank v. Office of Thrift  Supervision, 976 F. 2d, at 212 (noting that because "[c]apital  requirements have been an evolving part of the regulatory scheme since  its inception," the Bank Board "would have expected changes in statutory requirements, including capital requirements"); Carteret Sav. Bank v.  Office of Thrift Supervision, 963 F. 2d, at 581 (observing that "[i]n  the massively regulated banking industry, . . . the rules of the game  change with some regularity").


56
 See also Hughes Communications Galaxy, Inc. v. United  States, 998 F. 2d, at 957-959 (rejecting sovereign acts defense where contract was interpreted as expressly allocating the risk of change in  governmental policy); Posner & Rosenfield, 6 J. Leg. Stud., at 98   (noting that, subject to certain constraints, "[t]he contracting  parties' chosen allocation of risk" should always be honored as the most  efficient one possible).


57
 See, e.g., Chicago, Milwaukee & St. Paul R. Co. v. Hoyt,  149 U. S. 1, 14-15 (1893) ("There can be no question that a party may by  an absolute contract bind himself or itself to perform things which  subsequently become impossible, or to pay damages for the nonperformance").  This is no less true where the event that renders  performance impossible is a change in the governing law. See, e.g., 4  R. Anderson, Anderson on the Uniform Commercial Code Section(s)  2-615:34, p. 286 (3d ed. 1983) ("Often in regard to impossibility due to  change of law . . . there would be no difficulty in a promisor's  assuming the risk of the legal possibility of his promise"); 6 A.  Corbin, Corbin on Contracts Section(s) 1346, p. 432 (1962) ("Just as in  other cases of alleged impossibility, the risk of prevention by courts  and administrative officers can be thrown upon a contractor by a provision in the contract itself or by reason of established custom and  general understanding").


58
 See generally Hills Materials Co. v. Rice, 982 F. 2d 514,  516, n. 2 (CA Fed. 1992) ("[T]he [sovereign acts] doctrine certainly does not prevent the government as contractor from affirmatively assuming responsibility for specific sovereign acts"); D & L Construction Co. v. United States, 185 Ct. Cl. 736, 752, 402 F. 2d 990,  999 (1968) ("It has long been established that while the United States  cannot be held liable directly or indirectly for public acts which it  performs as a sovereign, the Government can agree in a contract that if  it does exercise a sovereign power, it will pay the other contracting  party the amount by which its costs are increased by the Government's  sovereign act, and that this agreement can be implied as well as  expressed"); Amino Brothers Co. v. United States, 178 Ct. Cl. 515, 525,  372 F. 2d 485, 491 (1967) (same), cert. denied, 389 U. S. 846 (1967);  Gerhardt F. Meyne Co. v. United States, 110 Ct. Cl. 527, 550, 76 F.  Supp. 811, 815 (1948) (same).  A common example of such an agreement is  mandated by Federal Acquisition Regulation 52.222-43, which requires government entities entering into certain fixed price service contracts  to include a price adjustment clause shifting to the Government  responsibility for cost increases resulting from compliance with  Department of Labor wage and fringe benefit determinations.  48 CFR  Section(s) 52.222-43 (1995).


59
 Of course it must be remembered that the Federal Circuit  had also said that the unmistakability doctrine does not apply where damages are being sought, an approach that even the plurality cannot  expressly endorse.


