In summary, it will generally be found that illegality renders a contract invalid or unenforceable. However, the decision in the Parkingeye case showed a limitation of this rule, according to which the contract can be maintained independently of that if the intention was limited to a partial and minor mode of performance and that this could be changed at any time. The application of this principle depends on proof of intent. The method of performance chosen and the degree of participation in such unlawful performance may be such that the contract becomes an unlawful contract. Therefore, the court will look at each case to determine the facts. In March 2010, the Legal Affairs Committee published its final report and draft law on illegality. The report notes that it is not possible to establish strict rules on illegality, but that judges must take into account the underlying policy and the facts of each case. A new law has been proposed on illegality and trusts. However, in assessing illegality in the context of contract law, recent case law has introduced the changes desired by the Legal Affairs Committee, which consist of taking into account the political reasons underlying the defence and examining each case for its facts, rather than applying a mechanical approach. For example, when English lawyers speak of „illegality“ for unjust enrichment, they usually do so in the context of the termination of partially fulfilled illegal contracts. Two parties enter into an illegal contract.
What usually happens is that you pay for a service to be provided, but you do not receive the agreed exchange. Can this party recover the value it transferred to the underperforming beneficiary? The law in this area is complex and difficult to formulate precisely. There are a number of reasons why it is not easy for judges to find a consensual answer to this problem. A finding of illegality under English law means that the contract is void. No action for damages for non-performance can be brought, nor is there an order for a specific service. With such a firm stance on contract enforcement, the pressure falls entirely on the law of unjust enrichment to clean up the mess. And the difficulties are only exacerbated by the fact that English law takes an extremely broad view of what constitutes an unlawful contract.1 It includes not only treaties for the commission of crimes, such as a contract to kill or injure another person, but also contracts the performance of which is not unlawful in the criminal sense. are not applied for various reasons of public policy. These contracts include adultery contracts, contracts to commit civil wrongs, contracts to indemnify others from liability for unlawful acts, contracts limiting marriage, contracts to promote sexual immorality, insurance contracts where there is no insurable risk, contracts to replace the jurisdiction of the courts, contracts dealing with the enemy and contracts restricting personal freedom.
The merits of the plaintiff who pays a hitman to murder a business rival are markedly different from those who pay a premium for an insurance policy in which he has no insurable interest. Another difficulty in this area arises from the fact that the role of contractual illegality is in many cases ambiguous. While in some cases it is clearly a defence to an otherwise valid claim for restitution of unjust enrichment, in other cases illegality appears to be a ground of claim in itself, at least prima facie. In other words, illegality creates an obligation to return unjust enrichment that would not exist without illegality. Unfortunately, this distinction between illegality as a defence to a claim for restitution of unjust enrichment and illegality as an exception of unjust enrichment is not always clear both in case law2 and in legal literature. Cases of illegality as a defense and illegality as a cause of action are usually simply merged, making an already difficult topic almost incomprehensible. This essay, which follows the scheme first proposed by Professor Birks,3 assumes that the role of illegality in unjustified claims for unjust enrichment can only be understood if a distinction is first made between defence and defence. The criterion used here to decide which side of the line a particular case is located on is as follows. If we rule out illegality, does the plaintiff still have a valid plea? If the answer to this question is yes, then illegality serves as a defence. Conversely, if the elimination of illegality would lead to the failure of the claim, illegality requires the existence of a means and does not serve the object of the defence.