Illegality and Various Consequences

ILLEGALITY A contact to be legally binding it should be legal. The contracts which are against the law or the public policy are consider as illegal contracts. Courts do not enforce illegal contracts and treated as void contracts.

There are four major criteria to decide the illegality of a contract. Contracts declared illegal by statute law. Statute law consists of both statutes and ordinance which had been legislated by the parliament of the country. Every contact should adhere to the statutes prepared by the parliament.If an element of a contract exceeded any statue that contract becomes illegal. A contract does not need to be a criminal offence in order to be decided as an illegal contract.

For an example if there is a minimum price placed for a certain product by a statute such as “consumer protection act” and when a contract that goes beyond the price element fixed by the statute, then it becomes illegal thus court can void such a contract. Contracts that go against common law. In Sri Lanka, the Roman-Dutch law is considered as the common law.It is important to note that Roman-Dutch law only acts as a residuary law which contents only five present of the contract law.

In respect of the three civil marriage laws, that is kandyan marriage law Muslim marriage law and thesawalame law the Roman-Dutch law acts as a residuary law. That means regarding a particular issue, if three local laws are silent, Roman-Dutch law comes to enact as a residuary law. And some of the property always belongs to the government. Which means no can claim, own or destroy? Some recourse, for an example costs, forest and rivers always remain with state.

Therefore if two parties get together and carried out a contract to cut-down trees in a forest, it becomes illegal since such a contract goes beyond the common law. Contracts void for being against the public policy. Sometime there may be situations where contracts may not break any laws but still they may become declared illegal due to the fact that such contracts violate the acceptable public policy. Therefore courts do not permit to form contracts which go against the public policy.

However the term public policy is merely a legal term and does not indicate that it is related to existing government policies.In addition courts have prepared a list of contracts which are deemed to be opposed to public policy : a) Agreement for stifling precision and for outing jury diction of courts are unlawful b) Agreement curtailing or extending the period of limitation prescribed by law are not enforceable. c) Agreement in fraud of insolvency law is illegal. d) Agreement for using improper influence of any kind with judge or officer of justice is void.

e) Agreement in restraint of the marriage of any person other then a minor is void. f) Agreement to procure marriage for reward is void. ) Agreement to pay money to parent or guardian in consideration of giving his daughter in marriage I void. Similarly, a promise by the bride’s Parent to pay money to the bridegroom or his parent I illegal.

h) Traffic by ay of ale in public office and Appointment or title for monetary consideration I illegal. i) Agreement tending to create monopoly are void. j) Agreements in restraint of trade are void, partial restraint I allowed in sale of Goodwill. k) Contract unduly retrain individual liberty are enforceable. [http://www. reportbd.

om/articles/42/1/Void-Contract/Page1. html ] Contracts that go against the morality. Morality is the quality of being in accord with standards of right or good conduct or a system of ideas that fall into those same categories. [http://www.

allaboutphilosophy. org/definition-of-morality-faq. htm ]. Morality is depending on the culture, religion and other traditions in a country.

It can be varies from country to country due to this reason. Morality is much broader than the statutory law. And when a contract is made it should adhere within the accepted morality and should not go against it.Courts can void such contracts that go against the morality.

For an example when there is a relationship between an unmarried woman and a married person and if the particular woman decided to break their relationship, that particular person cannot take any legal actions against that woman ever since the promise of marriage contract between them is against the morality and thereby courts may declare it as an illegal contract which is voidable. Consequences of illegality. Enturpi Cauza If one is engaged in illegal activity, one cannot sue another for damages that arose out of that illegal activity. http://www. duhaime. org/LegalDictionary/E/Exturpicausanonorituractio.

aspx ]. In other words this means that if the contract is illegal such contracts are considered as void thus no legal consequences arise under this. This is because of the fact that courts do not enforce illegal contracts and even cannot be accepted for hearing at the court. Inpari Delicto Legal principle that if two parties in a dispute are equally at fault then the party in possession of the contested property gets to retain it (courts will not interfere with the status quo).It implies that if a party whose action (or a failure to act) precipitates breach of a contract, or which fails to take appropriate action (or takes inappropriate action) to limit or recoup a loss, may not claim damages. [http://www.

businessdictionary. com/definition/in-pari-delicto-doctrine. html#i xzz0yxs2Napo]. Courts may accept some illegal cases under this rule. If the plaintiff is equally guilty as the defendant, the courts may hear the case and may provide remedies to the defendant.This is due to the fact that Inpari Delicto deemed that if the both parties are equally responsible for the illegality, then the defendant is in a stronger position whereas courts do not support the plaintiff to recover anything from the defendant.

However there are some exceptions to the Inpari Delicto rule where the court may favors the plaintiff : 01). Where the guilt of the parties is not equal. When there is a possibility to prove that the guilt of the plaintiff is less than the guilt of the defendant, courts sometime may provide the remedies for the plaintiff.This could be happen if the plaintiff is able to prove that there is a mistake in the facts made by the defendant at the time of making the contract.

In such a scenario court may order the plaintiff to recover any money paid or should receive despite the fact that contract is illegal in nature. 02). Where the illegal activity substantially unperformed. This occurs when the illegal purpose of the contract is not carried out because one of the parties to the contract repents in time and prevents the illegal act to be executed any further.

In such a case, the party who stopped the act to be carried out will be able to recover anything which he has paid to the other party. However this could be achievable only if it takes place when it would still have been possible to perform the contract. If the illegal purpose could not be realize for some reason that is out side the control of the plaintiff, he will not be able to recover the payment from the other party. 03). Unjust enrichment.

The law only permits the persons to be rich in just and acceptable ways. Law