Contract Illegality
Contract Illegality
Contract Illegality
(GIMPA)
COURSE CODE: FLAW
COURSE NAME: LAW OF CONTRACT II
DEVELOPING A MORE BALANCED FRAMEWORK FOR
DEALING WITH STATUTORILY ILLEGAL CONTRACTS
The traditional common law rules governing the effects of illegality on contracts have been widely
criticized as uncertain and arbitrary in their application (Shand, 1972).
It tends to produce gross injustice in certain cases as because of their all or nothing impact.
The supreme court of Ghana has described the existing legal regime on the effect of contractual
illegality as unduly rigid and technical in urgent need for reform
(City & Country waste ltd v. Accra Metropolitan Association).
As a general rule, the courts will not enforce a contract which is illegal
or contrary to public policy
(City & Country waste ltd v. Accra Metropolitan Association).
THRUST / OBJECTIVES
A contract may be deemed illegal either because its formation or performance involves a
violation of a statue or Because its falls within any recognized categories of contracts to be
illegal on grounds of public policy Where a prohibition is not explicitly stated, establishing
a source of an alleged illegality intended to render a contract illegal is a dicey decision
(i.e. resorting to convoluted judicial interpretations sometimes
resulting in decisions which are confusing and irreconcilable
[Grodecki J.K, 1955, City & Country waste ltd v. Accra
Metropolitan Association])
CASES
Shaw v. Groom
St John Shipping Corporation v. Joseph Rank Ltd
Olatiboye v Captain
Cope v. Rowlands
Vita food product inc. v. Unus shipping co ltd
Hughes v. Asset Managers Plc
In reviewing the cases, it is clear that the courts have taken a more realistic view that, vacating contracts
because they are implied by statute as illegal and depriving all parties any reliefs does not further the
purpose of the statues and thus this could not be the objective of the statue.
THE PERSPECTIVE OF THE GHANAIAN COURTS ON IMPLIED
STATUTORY ILLEGALITY:
Its worth knowing that the Ghanaian judicial approach has been increasingly more
flexible and pragmatic, carefully balancing the various policy considerations before
arriving at the conclusion that a contract is impliedly prohibited by a statue.
Effect on enforceability;
In determining whether money, property or other benefit transferred under an illegal contract is
recoverable, the common law applies the Latin maxim I n pari delicto potior est conditio defendentis (ie
where the parties are equally blameworthy, the defendants, has the stronger position). Therefore the
claimant will be allowed to recover if him or her is the less blameworthy party.
Claims of a restitutionary nature aimed at recovering money, property or any other benefit transferred
under an illegal contract may be allowed under the following conditions:
Outline the progressive paths that the courts are charting to promote
fairness on a case-by-case basis and considers some approaches which
have been adopted in other jurisdictions in managing the effects of
contractual illegality.
whether or not i agree with the Author's approach to dealing with the
illegality problem