Web 2

1. 'The content of illegality and public policy cannot remain immutable, but must change with the evolution of public opinion, morality and legislative policies.' When and why are contracts tainted by illegality?

See W2.1.

This question invites you to (a) set out and(b) explain the categories of contracts which are illegal or contrary to public policy. (a) is relatively straightforward (see W2.1), while (b) requires you to reflect on the justifications for refusing to enforce contracts (especially those which are not illegal per se) and so undermining freedom of contract. Give some examples of how the law in this area has changed over time and with changes in social values and legislative policies. Should the law be more active or less active in this area?

2. What is wrong with contracts in restraint of trade? Are they ever enforceable?

What is a contract in restraint of trade (see W2.1.2.9)? Why are they viewed with suspicion? When, if ever, are they enforceable (what is the legal test)? How can any enforceability be justified?

3. 'The effect of illegality on the validity of a contract depends on a variety of factors.' Discuss.

See W2.2.1.

What factors do the courts take into account in determining the enforceability of contracts tainted by illegality (e.g. knowledge of illegality, fraud, nature of illegality)? How are cases classified? What gradations of unenforceability may be imposed by the law (e.g. unenforceable by one party, severance)? Is the current law satisfactory? Would you suggest any reforms (see notes on question 4)?

4. Do you agree with the Law Commission's recommendation that courts should have discretion in deciding whether or not illegality should be a defence to a claim for contractual enforcement? What factors should the court take into account in exercising such discretion?

See W2.2.3 in particular.

What is the justification for the Law Commission's proposal of a discretionary approach? How would it improve the current law (you may want to mention that the discretion also applies to the determination of restitutionary and proprietary rights)? What factors does the Law Commission suggest that the court takes into account (e.g. seriousness of the illegality, knowledge of the claimant, deterrence, proportionality)? Do you agree with the Law Commission's list?

**5. When does, and when should restitution of the benefits conferred under an illegal contract be permitted?**

See W2.2.2.

What is the general rule regarding restitutionary claims?
What exceptions exist to this general rule? What is their justification?
How satisfactorily do these exceptions operate?
In so far as the exceptions are open to criticism, how can they be improved (see notes on question 4 on the Law Commission's proposal)?

6. 'The illegality doctrine is not a principle of justice, it is a principle of policy, whose application is indiscriminate and so can lead to unfair consequences. It allows no room for the exercise of any discretion by the court and is capable of producing injustice.' Discuss.

See W2.2.

This is a quote from Lord Goff in Tinsley v. Milligan.

What is the principle of policy mentioned? How is it justified?
What is the justification for exceptions to the general rule of no enforceability and no restitution?
Has the general rule or its exceptions produced unfairness or injustice (give examples)?
Is it true that the exceptions leave no room for discretion (what about latitude in interpretation)?
Should the current law be reformed? If so, why and how?

7. Alfred was a licensed haulier under the (fictitious) Licensing and Regulation of Road Hauliers Act 2005. Section 1 of the Act makes it a criminal offence for any road haulier to operate without a license. Section 2 requires all loads carried to be accompanied by a 'statutory invoice' detailing its content and certifying the haulier's compliance with safety regulations relating to loading and driver breaks. Advise Alfred in the following circumstances:

(a) Alfred delivered a load for Bob but failed to provide a statutory invoice at the time of delivery because he did not notice that it had fallen out of his truck during one of his stops. Bob refuses to pay.

Can Alfred sue Bob for payment? Refer to diagram W2B:

Is the contract expressly or impliedly prohibited by statute?
Does the failure to provide an invoice in this case so violate the purpose or policy behind the statute that enforcement should be prohibited?

(b) Alfred delivered a load for Camilla but failed to provide a statutory invoice at the time of delivery because Camilla said she did not need one. Camilla refused to pay but insisted that Alfred pay for the goods damaged in transit.

Can Alfred sue Camilla for payment? Refer to diagram B:

Is the contract expressly or impliedly prohibited by statute?
Does the failure to provide an invoice in this case so violate the purpose or policy behind the statute that enforcement should be prohibited?
Is Alfred aware of the illegality? What is the significance of the answer?
Can Camilla sue Alfred for the damage to her goods when she refuses to pay and when she has instigated the illegal performance? What could be her cause of action? What defence is open to Alfred?

(c) Alfred delivered an urgent load for Delia in breach of the safety regulations by taking insufficient breaks during the journey at Delia's request. Delia refuses to pay. If Delia has pre-paid but calls off the contract before Alfred was due to take his first safety break, can she recover the sum from Alfred?

Can Alfred enforce the contract against Delia?

Was the contract, at its formation, intended to be performed in an illegal way?
Would allowing Alfred to enforce the contract undermine the purpose behind the illegality?
Can Delia claim restitution of the money paid?
Can she bring herself within one of the exceptions to the general rule against restitution?

(d) Alfred agreed to carry a load for Errol which Errol had paid for in advance. Alfred refuses to perform the contract when he discovers that his license has expired. Can Errol compel Alfred to return the payment?

Whether Errol can enforce the contract depends on whether the contract is illegal per se? Is ignorance of the expiry of Alfred's license relevant?

Can Errol make out a ground for restitution other than illegality (e.g. mistake as to law or as to fact)? Would restitution to Errol undermine the purpose behind the requirement of a license?

(e) Alfred transfers one of his trucks to Fifi (his daughter) in a sham transaction to keep it out of the hands of his creditors. After Alfred reached a settlement with his creditors, Fifi refuses to return the truck, claiming that it is hers.

On what basis can Alfred seek restitution of the truck from Fifi? This is a re-run of Tribe v. Tribe. You should indicate your awareness of the criticisms of the decision, which may be the basis of an appeal to the House of Lords.

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Oxford University Press, Online Resource Centre, Web 2.