Statutory Illegality

A contract becomes void once considered illegal by the court. Where the terms of a contract
are explicitly prohibited by a statute; the contract cannot be enforced. However, where terms of a
contract are implicitly prohibited by a statute then there are two questions which the court uses to
determine the use of implied statutory illegality.
1. Is the sole object of the statute to increase national revenue?
Smith v Mawhood (1845) 14 M&W 452
The plaintiff entered into a contract to sell tobacco without a license, prescribed by the
Excise Act. The court decided the contract was not illegal. Hence, the plaintiff could recover for
the breach as the primary purpose of the statute was national revenue.

2. Does the statute contemplate the illegal performance of a contract?

Archbolds (Freightage) Ltd v Spanglett Ltd [1961] 1 OB 374
The contract was found to be enforceable. However, the performance, of carrying goods
without the required license, was illegal. The plaintiffs could claim in negligence but the
defendants could not recover anything.

Common Law
- Contracts to commit crimes or tort
Bigos v Bousted [1951] 1 All ER 92
The court found that no claim could be made to recover for the disguised share
certificate which was knowingly an illegal security of a loan.

- Contracts that prevent the administration of justice

Hyman v Hyman [1929] AC 601
In a deed of separation, a clause to not petition any court was outlined. It was
found that the term was the prevention of administration of justice and was deemed
illegal.

- Sexually immoral Contracts

Pearce v Brooks (1865) LR 1 Ex 213
The court found that the contract was entered into, despite it knowingly being for
an illegal purpose, hence the plaintiff could not recover for the damage nor non-
payment.

- Contracts which involve public corruption

Parkinson v College of Ambulance Ltd [1925] 2 KB 1
The plaintiff could not recover anything as it was found that it is illegal to
purchase a public title and the donation made irrecoverable.

There are times when contracts, previously deemed illegal, are enforceable. If a clause
which caused a contract to be deemed illegal is removed without altering the contract. To sever
parts of the contract the question of whether the illegal provision could be removed without
modifying the words of the contract is raised. Then the contract is supported by consideration.
 References
All Answers ltd, 'Illegality in Contract Law' (LawTeacher.net, March 2023)
<https://www.lawteacher.net/lectures/contract-law/vitiating-factors/illegality/?vref=1> accessed
23 March 2023

UpCounsel, 'Illegality in contract law: Everything you need to

know' (UpCounsel, n.d.) <https://www.upcounsel.com/illegality-in-contract-law#:~:text=Me
%20Prove%20Illegality%3F-,Illegality%20in%20contract%20law%20is%20a%20concept
%20which%20indicates%20that,that%20the%20contract%20is%20illegal.> accessed 22 March
2023