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Part V Illegality and Public Policy, 16 Illegality

From: Contract Law in Practice

Neil Andrews

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2022. All Rights Reserved.date: 03 July 2022

Subject(s):
Breach of contract — Illegality and contract — Contract and transfer of title

This chapter examines the various heads of illegality, such as agreements contrary to statute or agreements to defraud the tax authorities. Neither party can sue on a contract if the contract is expressly or by necessary implication prohibited by statute or the common purpose was to commit a crime or other civil wrong. Nor can a claimant sue on a contract if the claimant became aware that the contract would involve illegally and then participated in, or was implicated in, that wrongdoing (it is otherwise if claimant was ignorant of, and not implicated in, the defendant’s decision to perform it in an illegal fashion, or the claimant was guilty of only incidental illegality during performance). The court must refuse to give effect to a transaction if its illegal nature emerges during the course of the case. In Patel v Mirza (2016) the Supreme Court radically tilted the law in favour of the restitution of money or property transferred under an illegal contract, unless there is a compelling contrary argument of legal policy.

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