illegal contract


Also found in: Financial.

illegal contract

a contract maybe described as illegal if the aim or object of the contract is criminal or immoral; some specific rule of statute or common law says that it is; the method of contracting is illegal. At common law, contracts to commit a crime or promote sexual immorality are illegal. This latter proves difficult in an era when many people live in a state that at the time when many of the authorities were decided was considered immoral. Thus, contracts between cohabitees vary in effect across the Anglo-American world. Trading with the enemy is contrary to public policy, another head of illegality. Restrictive covenants and contracts in restraint of trade are regarded suspiciously by the courts. There is a general assumption that such contracts are illegal but in modern times their commercial necessity means that the assumption is easily reversed. Included are pacta de quota litis, or ‘agreements to share the proceeds of litigation’, a rule that prevents lawyers in the UK taking percentage fees. Certain gaming contracts that are made used to be illegal by statute but the Gambling Act 2005 provides that the fact that a contract relates to gambling will not affect its enforcement.

In all these cases the rule ex turpi causa non oritur actio applies: ‘an action does not arise out of an illegal cause.’ This can be harsh if property or money has been transferred contrary to some obscure and technical statute and the parties are not equally blameworthy (in pari delicto). The law of restitution maybe argued in such cases. As the name suggests, the UNFAIR CONTRACT TERMS Act 1977 and other related legislation mitigates the effect of certain terms and this is done by making certain contract terms illegal.

References in periodicals archive ?
The illegal contract caused a loss of Rs14 billion to the national exchequer.
The court also stated that the insurance policy that was supposed to cover her marijuana was an unenforceable illegal contract.
He said that Ahad Cheema awarded illegal contract to Paragon in Aashiyana Housing Scheme.
Justice Alam said that a illegal contract could not not be valid as no law gave an authority to the chief executive to send an accused in exile.
The legal looking, but illegal contract asks questions about the systems and structures of the art market, and how they can rob a work of its meaning and value.
In Qatar, complaints about kafala center on wage theft, passport confiscation, excessive recruitment fees, delayed wage payments, substandard dormitory housing, illegal contract substitutions and an onerous requirement that employers give permission before a worker can obtain an exit visa, making it more difficult for workers to extricate themselves from abusive work environments.
The Championship club have been forced to pay back PS1200 to Kieran Doran after they handed him an illegal contract that paid only PS1 a week.
In case any action is brought in which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it.
At the time DIKO vice chairman Nicolas Papadopoulos said that his party was not convinced of the legality of the move adding that they should not be expected to approve any funds to pay an illegal contract.
However, despite concluding that there "should, logically, be no difference in ultimate consequence between the case where a vendor has been paid under an illegal contract and the one in which payment has not yet been made," and that, "[i]n neither case can the usual concern of equity to prevent unjust enrichment be allowed to overcome and extinguish the special safeguards which the Legislature has provided for the public treasury," (95) the Court, nonetheless, went on to fashion a far less punitive sanction than the forfeiture remedy which the trial court had ordered.
What does the law define as an illegal contract of employment?
JMC argued that Florida courts should not enforce an arbitrator's award based on an illegal contract.