In English contract law, a defence of illegality can be used to void a contract if it was formed illegally or if the performance of the contract would result in illegal activity. However, for this defence to be successful, certain key elements must be present.
1. Illegality of the contract
The first element of a defence of illegality is that the contract itself must be illegal. This means that the contract must involve activities that are prohibited by law, such as drug trafficking or money laundering. If the contract is legal, then this defence cannot be used.
2. Knowledge of illegality
The second element that must be present is the knowledge of the illegality of the contract by both parties. It is not enough for one party to be aware of the illegality, both parties must have knowledge of the illegal activity.
3. Active participation in illegality
The third element is that both parties must have actively participated in the illegal activity. Simply being aware of the illegal activity is not enough, both parties must have taken an active role in the illegal activity.
4. Unenforceable contract
The fourth element is that the contract must be unenforceable. This means that it is against public policy and should not be upheld by the courts. If the contract is found to be enforceable, then the defence of illegality cannot be used.
5. Public policy considerations
The fifth and final element is that public policy considerations must be taken into account. The courts will consider whether enforcing the contract would be detrimental to the public interest. If the answer is yes, then the contract will be voided.
In conclusion, a defence of illegality is a powerful tool in English contract law that can be used to void a contract if it involves illegal activity. However, for this defence to be successful, certain key elements must be present. These include the illegality of the contract, knowledge of illegality by both parties, active participation in illegality, an unenforceable contract, and consideration of public policy. If all these elements are present, the defence of illegality can be used to protect one party from being held liable for a contract that is against the law.