4: Illegality

Question 1

Illegality (general)

Answer 1

K is illegal if it violates a statute or rule of common law; court will not enforce an illegal K or term even if clear that parties entered voluntarily and there was no improper bargaining

Question 2

Against Public Policy

Answer 2

Even if no rule of law forbids K, it may so harm the public interest that it should not be recognized/enforced

Question 3

R178 (1): When a Term is Unenforceable on Grounds of Public Policy

Answer 3

(1) promise/term of agreement is unenforceable if legislation provides it is so or interest in enforcement is CLEARLY OUTWEIGHED by public policy against enforcement of terms

Question 4

R178 (2)-(3): Weighing Interest in Enforcement, Public Policy Against Enforcement

Answer 4

(2) in weighing interest in ENFORCEMENT, court considers (a) parties’ justified expectations, (b) any forfeiture that would occur if enforcement was denied, and (c) any special public interest in enforcement of term; (3) in weighing AGAINST enforcement, court considers (a) strength of policy as manifested by legislation, (b) likelihood that a refusal to enforce term will further policy, (c) seriousness of misconduct involved and extent to which it was deliberate and (d) directness of connection between misconduct and term

Question 5

R179: Bases of Public Policies Against Enforcement

Answer 5

Public policy against enforcement of promises or other terms may be derived by the court from (a) legislation relevant to policy, (b) need to protect some aspect of public welfare, for example (i) restraint of trade, (ii) impairment of family relations, (iii) interference with other protected interests

Question 6

R197: Restitution Generally Unavailable

Answer 6

Party has no claim in restitution for performance that he has rendered under/in return for a promise that is unenforceable on grounds of public policy unless denial of restitution would cause disproportionate forfeiture

Question 7

R198: Restitution in Favor of Party Who is Excusably Ignorant or Is Not Equally in the Wrong

Answer 7

party has claim in restitution for promise that is unenforceable on grounds of public policy if (a) excusable ignorant of facts/legislation of minor character where absence of it would be enforceable or (b) he was not equally in the wrong with the promisor

Question 8

Sinnar v. Le Roy: Beer License

Answer 8

Illegality, if of a serious nature, need not be pleaded and court may raise issue sua sponte; K was unenforceable and court will not knowingly aid in the furtherance of an illegal transaction but will instead leave the parties where it finds them