In the case of Dames & Moore v. Regan, Secretary of Treasury et al., 1980, the U.S Supreme Court was asked to decide whether President Jimmy Carter had exceeded his authority in handling a crisis involving Iran and American hostages. The president had frozen Iranian assets held in America and then agreed to terminate legal claims against Iran as part of an agreement for release of hostages. Dames & Moore, a company with pending claims against Iran for unpaid contracts, challenged these actions arguing that they violated their rights under international law and U.S constitution. The court ruled 8-1 in favor of the government stating that while neither Congress nor any specific statute explicitly authorized such action by President Carter; there was a long history (past practice) indicating congressional approval for executive discretion on this matter. Furthermore, after-the-fact legislation passed by Congress also seemed to approve what he did retroactively. Therefore it concluded that although presidential power must derive from an act of Congress or from Constitution itself; when faced with "a seizure so unprecedented...and undertaken pursuant to no explicit authorization", courts can look at past practices between two branches along with relevant legislation for guidance.

In the dissenting opinion for Dames & Moore v. Regan, Justice William J. Brennan Jr., joined by Justice Thurgood Marshall, argued that President Carter's executive orders to nullify legal claims and transfer frozen Iranian assets exceeded his constitutional authority. They contended that such actions should be under Congressional control as they involve significant policy decisions affecting individual rights and foreign relations. The justices criticized the majority's reliance on historical practice to justify presidential power in this case, asserting it was an inadequate basis for determining constitutionality without clear congressional authorization or statutory framework supporting these actions. They also expressed concern about potential abuse of executive power if left unchecked by judicial review based on a proper understanding of separation of powers principles enshrined in the Constitution.