In 1988, the New Jersey Supreme Court ruled that a surrogacy contract was invalid based upon the circumstances of that case. The Court found that such agreements are in direct conflict with existing statutes and in conflict with New Jersey public policy. In the Baby M case, would-be parents entered into a contract with a women who agreed to supply the egg for in vitro fertilization, to implantation of the embryo and to carry the fetus to birth at which point the would-be parents would adopt the baby. However, the surrogate mother changed her mind after the birth of the child and would not agree to the adoption. The Baby M decision made it clear that New Jersey courts disfavor surrogacy agreements especially those involving monetary exchange.
The Baby M case involved a surrogacy agreement by a surrogate who was also the biological donor of the egg. Since the 1988 Baby M decision, the question of whether or not surrogacy agreements are invalid regardless of whether or not the surrogate mother has biological relations to the child has never been answered. However, recently, on December 23, 2009, a trial Court in Hudson County entered a decision in the A.G.R. v. D.R.H. and S.H. case finding that surrogacy agreements in New Jersey are invalid regardless of the biological relationship of the surrogate mother.