In the case of Water, Light and Gas Company of Hutchinson v. The City of Hutchinson, Kansas (1907), the Supreme Court was asked to decide on a dispute between a utility company and a city over their contractual agreement. The Water, Light and Gas Company had entered into an agreement with the city to provide water services for 30 years. However, after only ten years, the city decided to construct its own water plant in violation of this contract. In response, the utility company sued for damages claiming breach of contract by constructing its own competing facility before their agreed upon term expired. The Supreme Court ruled in favor of the utility company stating that while municipalities have broad powers to act in public interest including providing utilities; they cannot violate contracts without due process or just compensation under Fifth Amendment protections against taking private property for public use without fair compensation.

In the dissenting opinion for Water, Light and Gas Company of Hutchinson v. The City of Hutchinson, Kansas, it was argued that the city's decision to construct its own waterworks system infringed upon the exclusive rights granted to the plaintiff by a previous contract with the city. This action was seen as an impairment of contractual obligations which is prohibited under Article I, Section 10 of U.S Constitution. It was also contended that while municipalities have inherent power to provide necessary services like water supply for their citizens' welfare and public health purposes; they should not be allowed to do so in a manner that infringes on existing contracts or vested rights without due process or just compensation. Furthermore, it was suggested that if such actions were permitted then no private corporation would dare enter into any agreement with a municipality out of fear that their contractual rights could be arbitrarily violated at any time.