CONTRACT LAW
REVIEW NOTES
ILLEGALITY
Contracts that are vitiated by illegality will not be enforceable, since
no court would lend its aid to a man who founds his cause of action
upon an immoral or illegal act (Holman v Johnson).
Forms of illegality
Statutory illegality
1. Where a statute expressly prohibits a contract, the
contract will be rendered void and unenforceable
(Mahmoud, Ochroid).
a. Examples include S 14 (1) of the Human Organ
Transplant Act, which renders any contract for the sale
of organs or blood void
2. However, a statute may prohibit only certain forms of conduct,
but not the contract itself. Courts may find that the contracts
are impliedly prohibited by the statute but would be slow to do
so (Ting Siew May). It was held in Ting Siew May that an
implied prohibition would only be found if there was a
necessary inference supported by parliamentary intention.
3. Contracts for an illegal purpose would be rendered void and
unenforceable, subject to a limiting principle of
proportionality, for being contrary to public policy (Ting
Siew May).
4. Where the statute prohibits only the conduct, courts would not
render a contract void if it is wholly disproportionate to the
wrong committed (St John Shipping).
a. The carrier had already been penalised under the statute
b. The consequence of denying enforcement was also
, serious since all consignees could withhold freight
charges
5. However, courts would be more inclined to nullify the
contract if the contract had been entered into with the
intention of committing an illegal act (Ashmore).
Common law illegality
1. Contracts entered into with the object of committing an illegal
act will be rendered void even if the act is in itself legal (Ting
Siew May). In St John Shipping, Devlin J was of the view that a
contract would be void if there was mutual intent to commit
an illegal act and would be voidable at the behest of the party
if there was intent only by one party.
2. Courts would have regard to the proportionality of the wrong
when determining whether a contract is enforceable (Ting
Siew May, ParkingEye).
3. A multi factorial assessment will be undertaken to determine
whether refusing to enforce the contract would be a
proportionate response to the 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
4. However, the SGCA in Ochroid Trading clarified that this
balancing of proportionality would be confined only to the
limited sphere of common law illegality
5. Examples of common law illegality include:
a. Contracts contrary to good morals (Pearce v Brooks)
b. Restraint of trade (Man Financial)
c. Agreements which undermined the institution of marriage
(Kwong Sin Hua)
REVIEW NOTES
ILLEGALITY
Contracts that are vitiated by illegality will not be enforceable, since
no court would lend its aid to a man who founds his cause of action
upon an immoral or illegal act (Holman v Johnson).
Forms of illegality
Statutory illegality
1. Where a statute expressly prohibits a contract, the
contract will be rendered void and unenforceable
(Mahmoud, Ochroid).
a. Examples include S 14 (1) of the Human Organ
Transplant Act, which renders any contract for the sale
of organs or blood void
2. However, a statute may prohibit only certain forms of conduct,
but not the contract itself. Courts may find that the contracts
are impliedly prohibited by the statute but would be slow to do
so (Ting Siew May). It was held in Ting Siew May that an
implied prohibition would only be found if there was a
necessary inference supported by parliamentary intention.
3. Contracts for an illegal purpose would be rendered void and
unenforceable, subject to a limiting principle of
proportionality, for being contrary to public policy (Ting
Siew May).
4. Where the statute prohibits only the conduct, courts would not
render a contract void if it is wholly disproportionate to the
wrong committed (St John Shipping).
a. The carrier had already been penalised under the statute
b. The consequence of denying enforcement was also
, serious since all consignees could withhold freight
charges
5. However, courts would be more inclined to nullify the
contract if the contract had been entered into with the
intention of committing an illegal act (Ashmore).
Common law illegality
1. Contracts entered into with the object of committing an illegal
act will be rendered void even if the act is in itself legal (Ting
Siew May). In St John Shipping, Devlin J was of the view that a
contract would be void if there was mutual intent to commit
an illegal act and would be voidable at the behest of the party
if there was intent only by one party.
2. Courts would have regard to the proportionality of the wrong
when determining whether a contract is enforceable (Ting
Siew May, ParkingEye).
3. A multi factorial assessment will be undertaken to determine
whether refusing to enforce the contract would be a
proportionate response to the 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
4. However, the SGCA in Ochroid Trading clarified that this
balancing of proportionality would be confined only to the
limited sphere of common law illegality
5. Examples of common law illegality include:
a. Contracts contrary to good morals (Pearce v Brooks)
b. Restraint of trade (Man Financial)
c. Agreements which undermined the institution of marriage
(Kwong Sin Hua)
