In Parsons v. United States (1896), the U.S Supreme Court ruled that a contract made by an individual with the government is not immune from examination for fraud, even if it has been approved by a department of the government. The case involved George W. Parsons who had entered into contracts with the Department of Indian Affairs to provide goods and services to Native American tribes in Arizona and New Mexico. However, he was accused of overcharging for these supplies and services which led to his conviction on charges of defrauding the federal government under false pretenses. On appeal, Parsons argued that since his contracts were approved by a governmental department they could not be subject to scrutiny or prosecution for fraudulence; however, this argument was rejected unanimously by the Supreme Court justices.

In the dissenting opinion for Parsons v. United States, Justice Harlan argued that the majority's decision to uphold a law allowing Congress to unilaterally alter contracts between private individuals and Native American tribes was unconstitutional. He contended that such an action violated both the Fifth Amendment, which protects against deprivation of property without due process of law, and Article I Section 10 of the Constitution, which prohibits states from passing laws impairing contractual obligations. Furthermore, he asserted that this ruling set a dangerous precedent by granting Congress excessive power over private contracts. In his view, if left unchecked this could lead to potential abuses where Congressional authority is used arbitrarily or unfairly in other contexts involving contract disputes.