Canal Company v. Gordo was a case heard by the United States Supreme Court in 1867. The case involved a dispute between the Canal Company and Gordo, a former employee of the company. The Canal Company had hired Gordo to work on a canal project in Alabama. After the project was completed, Gordo was not paid the full amount he was owed. He sued the Canal Company for the unpaid wages. The Supreme Court ruled in favor of Gordo, finding that the Canal Company had breached its contract with Gordo by not paying him the full amount he was owed. The Court held that the Canal Company was liable for the unpaid wages and ordered it to pay Gordo the full amount. The Court also held that the Canal Company was liable for any damages caused by its breach of contract. The ruling in Canal Company v. Gordo established that employers are liable for any damages caused by their breach of contract. This ruling has been cited in numerous cases since then, and it has become an important precedent in contract law.

In Canal Company v. Gordo, the Supreme Court was tasked with determining whether a contract between two parties could be enforced despite its illegality under state law. The majority opinion held that the contract was unenforceable because it violated public policy and thus could not be upheld by any court of justice. In his dissenting opinion, Justice Field argued that while contracts which are illegal should generally not be enforced, this particular case presented an exception to the rule due to certain unique circumstances surrounding it. He reasoned that since both parties had acted in good faith and no one else would suffer from enforcing the agreement, there were sufficient grounds for upholding it as valid even though technically illegal under state law. Ultimately however, his dissent did not carry enough weight to sway the majority's decision and so they ruled against enforcing the contract in question.