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 ?
ISLAMABAD -- The Ministry of Water and Power has decided to initiate an internal inquiry to examine the facts regarding the award of an illegal contract to the chief financial officer (CFO) of Neelum-Jhelum Hydropower Project (NJHPP) in violation of Public Procurement Regulatory Authority (PPRA) rules and regulations, a reliable source in the ministry told Profit on Wednesday.
The previously revoked illegal contract of Royal Palm Golf and Country Club in Lahore by appointing an administrator did not affect the legitimate use of club by members.
The accused allegedly awarded an illegal contract for installation of 116 water filtration plants at exorbitant rates and malafide involvement of PSPC officials by means of corrupt practices caused a collective loss amounting to Rs 345.282 million to the national exchequer.
In the same year, PSO also sold crude oil to BPPL at abnormally subsidised rates under another illegal contract with the private firm.
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.
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.
JMC argued that Florida courts should not enforce an arbitrator's award based on an illegal contract. JMC argued that therefore, the trial court erred in refusing to consider the issue.
She says Fusari "induced" her into signing an illegal contract and wants back pounds 140,000 she gave him.
Under an illegal contract during 1997 and 1998, Scandlines hired bus drivers to drive day-trippers to the Gedser/Rostock ferry terminal.
Asuntoleijonat, a real estate company in Helsinki, was recently given a warning for offering illegal contract services online whereby customers have only been able to negotiate a contract through e-mail.
A judge ruled that VAT cannot be incurred on an illegal contract that has no legal equivalent.