Illegal Contracts The general position is that the law enforces agreements, which have been freely entered. It does usually not regulate the terms and conditions of agreements. Some agreements are not enforceable because they promote an illegal purpose, contemplate or involve unlawful performance or because they are deemed to be against public policy. Contracts which are unlawful by statute are […]
Categories Some contracts are not enforced because they involve the commission of an illegal act or because they are to be undertaken in an illegal manner. Agreements to a commit a crime or civil wrong are void. An agreement to undertake a crime or indeed certain civil wrongs, constitutes the criminal offence of conspiracy. The courts will not enforce a […]
Consequences of Illegality, The general principle is that the courts will not enforce an ilegal contract. This principle applies with even greater force where the party who seeks the court’s assistance is implicated in or has participated in the illegality. Where both parties are equally at fault, the contract will not be enforced. No order will be made for return […]
Contracts against Public Policy There are certain types of contracts which the courts will not enforce on public policy grounds, notwithstanding that they do not involve illegality in the sense of being criminal or a breach of civil obligations. What might offend public policy may change over time. The non-enforcement of contracts on public policy grounds involves value judgments by […]
Contracts undermining the Criminal Justice System Contracts which undermine the system of justice are unenforceable. Contracts prejudicial to the administration of justice are not enforced. A contract not to make a criminal complaint is invalid. The public interest in punishing crime requires that private parties may not settle criminal complaints. It is an offence to conceal an arrestable offence. An […]
Enforcement The basic rule is that the courts will not enforce an illegal contract or a contract affected or “tainted” by illegality. Damages, injunctions, and orders for performance will not be granted. Restitution will not be available. This principle applies with even greater force where the party who seeks the court’s assistance is implicated in or has participated in the […]
Overview Contracts in “restraint of trade” are void. This is because it is a fundamental principle, that a person should be free to use his labour or exercise his trade whether as employee or trader. Restraints are permissible where the agreement not to trade is for an objectively justifiable reason and extends no wider than necessary. An agreement not to compete for a period […]
Employment Contracts and Restraint of Trade Restraint of trade clauses are commonly found in employment contracts and in contracts for the sale of a business. The practical effect of a restraint of trade covenant is to restrain competition. Employment contracts are subject to particular scrutiny under the doctrine. In contrast to restraints on the seller of a business, employees are […]
Overview The common law renders void a contract which provides for an unreasonable restraint of trade. Restraint of trade refers to a purported contractual provision, which restricts a person’s ability to carry out his trade, profession or business with others. The restriction my restrict a person from setting up business in a particular field, within a certain geographical area for […]
Gaming Gaming and wagering contracts are generally void. The legislation provides that a contract to recover money or winnings is unenforceable. No legal action lies to recover money alleged to be won or paid upon a wager or which has been deposited as security for it. A promise to pay a person money in respect of a gambling or waging […]
Illegality & Restitution At least in the case of some types of illegality, assets transferred under an illegal contract may be, nonetheless, validly transferred. Restitution is not allowed for contracts which are prohibited by illegality. To do otherwise would undermine the prohibition. Where as a matter of public policy, a statute is interpreted as being for the benefit of a […]
Limited Powers Traditionally, a company was limited by its objects. Companies legislation has removed the ultra vires rule for most companies as and from December 2016. Dedicated Activity Companies remain subject to the rules. There were (and remain for DACs) significant exceptions and protections for third parties dealing with the company. The protections have been updated and restated for DACs. […]