Legal Definitions - Section 1981

Section 1981 refers to a specific federal law, 42 U.S.C. § 1981, which originated from the Civil Rights Act of 1866. Its primary purpose is to guarantee that all individuals in the United States have the same rights as white citizens to make and enforce contracts, to sue, to be parties in legal proceedings, to give evidence, and to enjoy the full and equal benefit of all laws for the security of persons and property.

This law is a powerful tool against intentional racial discrimination. A key aspect of Section 1981 is its broad application: it prohibits racial discrimination not only by government entities (federal, state, and local) but also by private individuals and organizations. Unlike some other anti-discrimination laws, Section 1981 focuses exclusively on intentional racial discrimination and does not require individuals to file a complaint with an administrative agency before going to court.

Here are some examples illustrating how Section 1981 applies:

• Example 1: Denial of Business Opportunity

  A highly qualified, minority-owned construction company consistently submits competitive bids for private commercial projects but is repeatedly overlooked by a large general contractor, who instead awards contracts to less experienced, non-minority-owned firms. The minority-owned company gathers evidence suggesting this pattern is due to racial bias.

  How this illustrates Section 1981: This scenario demonstrates a potential violation of Section 1981 because the general contractor, a private entity, is allegedly engaging in intentional racial discrimination by preventing the minority-owned company from "making and enforcing contracts" for business services. Section 1981 protects against such discrimination in private contractual relationships.

• Example 2: Discriminatory Service Denial

  A person of color attempts to purchase a new car from a private dealership. Despite having excellent credit and being ready to make a down payment, the salesperson refuses to negotiate a fair price, offers unfavorable financing terms not presented to other customers, and ultimately declines to sell the car, citing vague and inconsistent reasons. The customer later learns that white customers with similar financial profiles received much better treatment and successfully purchased vehicles.

  How this illustrates Section 1981: This situation could be a Section 1981 violation because the private car dealership is allegedly discriminating based on race in the "making and enforcing of a contract" (the car purchase agreement). The law ensures that individuals have an equal right to enter into and benefit from contracts, free from racial bias.

• Example 3: Unequal Access to State Programs

  A state government agency manages a program that provides low-interest loans to small businesses for economic development. A group of entrepreneurs from a specific racial minority community applies for these loans, meeting all published criteria, but their applications are consistently denied or delayed without legitimate cause, while applications from businesses owned by other racial groups are processed efficiently and approved readily.

  How this illustrates Section 1981: This example shows Section 1981's application to state government actions. The alleged discriminatory denial of access to state-provided loans could be seen as denying individuals "the full and equal benefit of all laws and proceedings for the security of persons and property" based on race. Section 1981 ensures that state programs and benefits are administered without intentional racial discrimination.