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Contract law: Illegality (Extra-contractual recovery of benefits…

- - - - Contract to commit an illegal act
        vs
        Contracts entered into with the object of committing an illegal act
        
        contract is the instrument of an illegal act, facilitates illegal act
        
        the contract itself may be innocuous
        e.g. subject matter is used for illegal purpose, contract documentation is used for an illegal purpose, performance of contract carried out in an illegal manner
        
        based on the contracting parties' intention and knowledge
        
        contract itself may not be illegal, but it will be treated as illegal due to public policy
        
        degrees of illegality: severity of the wrong v severity of remedy (voiding of contract)
        
        multi-factorial approach (TSM)
        
        -> outcome may vary, room for variation
        
        Limiting principle of proportionality
        
        main object was to run carpark, D used contract deceive carpark users to keep their parking fees
        
        illegality was not central nor necessary for performance of the contract -> disallow the contract claim would be disproportionate response to illegality
        (ParkingEye v Somerfield Stores)
        
        common law illegality considers fairness between parties, not as clear as statutory illegality
        
        (a) whether allowing claim would undermine purpose of the prohibiting rule
        (b) nature and gravity of illegality
        (c) remoteness or centrality of illegality to the contract
        (d) object, intent and conduct of parties
        (e) consequences of denying the claim
        (TSM)
        
        Abandonment of original intention
        
        only where there was ignorance of unlawfulness during formation of contract
    - - Contrary to good morals
        
        contract for the hire of a brougham for use by a prostitute
        
        P knew of the purpose of contract
        HELD: illegal
        (Pearce v Brooks)
        -
        
        advertisements for sex lines published in mens' magazines
        
        claimants tried to recover payments due under the advertising contract
        
        because not prostitution, contracts for sexually immoral purposes contrary to public policy but definition was not set in stone, not general moral code condemning this (actual a regulated industry), distasteful but not immoral enough
        HELD: not illegal
        (Armhouse v Lee Chappell)
      - Violation of statutory laws
        
        contract with object of committing an illegal act which contravenes statutory provision
  - - - easy to commit illegality due to plethora of laws
        
        policy of upholding contracts
        
        may have recourse to common law illegality
        
        Courts should be slow to find statutory illegality; focus should be on whether contract is prohibited, not whether conduct is prohibited (TSM, SGCA)
    - - Awareness at time of contract: void
        
        claimants were aware of regulations + carrier could not comply with regulations -> aware that contract would be performed illegally
        
        participation in illegality (there at time of cargo loading, benefited from paying less for smaller lorry)
        
        is this contract with intention to commit illegal act? (see common law)
        (Ashmore, Benson, Pease v Dawson)
  - - - Range of factors approach
        Whether "appropriate response" (moral dimension)
        
        seriousness of conduct
        
        knowledge/intention
        
        centrality of conduct to contract/performance
        
        seriousness of sanction
        
        whether denial of enforcement will further purpose of the rule
        
        denial -> deterrent to conduct
        
        denial -> ensure party does not profit from conduct
        
        prevention of inconsistency in law to maintain integrity of legal system
- - - - Not "in pari delicto"
        (less blameworthy)
      - Locus poenitentiae
        (timeous rejection)
        
        Lack of knowledge of unlawfulness in the first place
        
        Before illegal purpose/act is carried out or substantially achieved
      - Independent interest in property without reliance on illegality