In the case of Mayor and Aldermen of the City of Vicksburg v. Henson, Receiver of the Vicksburg Water Works Company in 1913, the U.S Supreme Court ruled on a dispute between a city government and a water company over contract terms. The city had entered into an agreement with the water company for exclusive rights to supply water for 50 years but later sought to nullify this contract after only ten years due to dissatisfaction with rates charged by the company. The court held that while municipalities have broad powers, they cannot unilaterally break contracts without cause or compensation as it would violate constitutional protections against impairing contractual obligations. Therefore, even though cities may be dissatisfied with their agreements' outcomes or conditions, they are still bound by them unless there is evidence of fraud or other illegal activities involved in its formation.

In the dissenting opinion for Mayor and Aldermen of the City of Vicksburg v. Henson, it was argued that the majority's decision to uphold a contract between a private company and city government violated principles of public policy. The dissenting justices believed that such contracts should not be allowed because they could potentially lead to corruption or misuse of public funds. They also pointed out that allowing this type of agreement would essentially give private companies control over essential services like water supply, which should be under governmental oversight for reasons related to health and safety regulations as well as fair pricing practices. Furthermore, they disagreed with the majority's interpretation of previous case law on this issue, arguing instead that those cases supported their view against these types of agreements.