Representatives from a number of the Thirteen Colonies assemble as the Stamp Act Congress in response to the Stamp Act 1765, to call into question the right of a distant power to tax them without proper representation.

The British Parliament is now faced with colonies who refuse to comply with their Act.

This, combined with protests that have occurred in the colonies and, perhaps more importantly, protests which have arisen in Great Britain from manufacturers who are suffering from the colonies' non-importation agreement, all lead to the repeal of the Stamp Act.

Normally the economic activity in the colonies would not have caused such an outcry, but the British economy is still experiencing a post-war depression from the Seven Years' War.

Another reason for repeal of the Stamp Act is the replacement of George Grenville, the Prime Minister who had enacted the Stamp Acts, by Charles Watson-Wentworth, 2nd Marquess of Rockingham.

Rockingham is more favorable towards the colonies and furthermore he is antagonistic towards policies that Grenville had enacted.

Rockingham invites Benjamin Franklin to speak to Parliament about colonial policy and he portrays the colonists as in opposition to internal taxes (which are derived from internal colonial transactions) such as the Stamp Act had called for, but not external taxes (which are duties laid on imported commodities).

Parliament now agrees to repeal the Stamp Act on the condition that the Declaratory Act is passed.

On March 18, 1766, Parliament repeals the Stamp Act and passes the Declaratory Act.

The Declaratory Act proclaims that Parliament "had hath, and of right ought to have, full power and authority to make laws and statutes of sufficient force and validity to bind the colonies and people of America ... in all cases whatsoever".

The phrasing of the act is intentionally unambiguous.

In other words, the Declaratory Act of 1766 asserts that Parliament has the absolute power to make laws and changes to the colonial government, "in all cases whatsoever", even though the colonists are not represented in the Parliament.