Colson v. Thompson was a case heard by the United States Supreme Court in 1817. The dispute arose when Colson, an individual from Virginia, sued Thompson for failing to pay him money that he had loaned to him. Colson argued that the debt should be paid according to the terms of their agreement and sought damages for breach of contract. The Supreme Court held that although there were no written documents evidencing the agreement between them, it could still be enforced as long as both parties agreed on its terms at some point prior to litigation commencing. Furthermore, they found that verbal agreements are just as binding under law as those made in writing and can therefore be enforced through legal action if necessary. This decision established precedent which has been followed ever since; namely, contracts do not need to be written down or signed in order for them to have legal force and effect so long as all parties involved agree upon their contents beforehand

In Colson v. Thompson, the Supreme Court was asked to decide whether or not a state court had jurisdiction over a case involving citizens of different states. The majority opinion held that the state court did have jurisdiction and could proceed with its decision in favor of one party. However, Justice Story dissented from this opinion on two grounds: firstly, he argued that there was no express authority for such an exercise of power by the state courts; secondly, he believed that it would be unconstitutional for them to do so because it would interfere with Congress’s exclusive right to regulate commerce between states under Article I Section 8 Clause 3 (the Commerce Clause). He concluded his dissent by stating that if any other tribunal than Congress were allowed to make decisions regarding interstate disputes then “it is difficult to perceive how any uniformity can be preserved in their determination” and thus “the whole system must become confused and deranged."