Introduction
In the law of contract in England and Wales, the doctrine of consideration is a fundamental element for the formation of a simple contract. For a promise to be legally binding, it must be supported by consideration, which is often described as a benefit to the promisor or a detriment to the promisee. However, not all acts or promises will be recognised as valid consideration by the courts. The statement that “consideration should not be illegal, immoral or contrary to public policy” captures a crucial limitation on this doctrine. This essay will examine this principle, explaining why the law refuses to enforce contracts that are founded upon such tainted consideration. It will argue that this rule is essential for upholding the integrity of the justice system and protecting wider societal interests.
Illegal Consideration
The most straightforward application of this principle is where the consideration for a contract is illegal. If an agreement requires one or both parties to perform an act that is forbidden by law, the courts will not enforce it. This rule is based on the legal maxim *ex turpi causa non oritur actio*, which means that no action can arise from a dishonourable cause (Stone and Devenney, 2017). For example, a contract to commit a crime, such as an agreement between two highwaymen to share the proceeds of their robberies, is void and unenforceable, as was humorously illustrated in the historic case of *Everet v Williams* (1725).
The illegality can arise either from the common law, such as a contract to commit a crime or a tort, or from statute. Many statutes expressly or impliedly prohibit certain types of contracts. The courts’ refusal to enforce such agreements is a matter of public policy, as it would be an affront to the legal system to lend its enforcement mechanisms to assist those seeking to break the law. Enforcing such a contract would make the court complicit in the illegality.
Immoral Consideration
The law also refuses to enforce contracts where the consideration is deemed to be immoral. This category is more ambiguous than illegality because societal standards of morality can change over time. Historically, this principle was often applied to contracts relating to sexual immorality. A classic example is *Pearce v Brooks* (1866), where the owner of a decorative carriage could not recover the hire fee from a prostitute who he knew intended to use it to attract clients. The court held that the contract was unenforceable because it was made for an immoral purpose.
While social attitudes towards sexual relationships have liberalised significantly since the 19th century, the principle that courts will not enforce contracts that are considered fundamentally immoral remains. However, what is considered ‘immoral’ today might be different, and the courts are generally more hesitant to refuse enforcement on this ground alone unless the conduct is particularly egregious or exploitative, as it risks imposing a particular judicial morality on the public (McKendrick, 2021).
Consideration Contrary to Public Policy
The broadest and most flexible category is that of contracts which are contrary to public policy. These are agreements which, while not necessarily illegal or immoral in a narrow sense, are considered injurious to the interests of the public. The courts have identified several types of contracts that fall into this category, such as:
- Contracts to oust the jurisdiction of the courts (Baker v Jones [1954]).
- Contracts that are prejudicial to the administration of justice, for example an agreement to stifle a prosecution for a criminal offence.
- Contracts in restraint of trade, which are prima facie void unless they can be shown to be reasonable between the parties and not contrary to the public interest.
The law on illegality and public policy was significantly reformed by the Supreme Court in *Patel v Mirza* [2016]. Prior to this case, the law was complex and could lead to unjust results. In *Patel*, the Supreme Court introduced a more flexible, policy-based approach. A person who has been involved in an illegal agreement may be able to recover money or property transferred under it, unless allowing them to do so would be contrary to the public interest. The court will consider the underlying purpose of the prohibition that was transgressed, any other relevant public policies, and the need for proportionality. This new framework demonstrates that the core issue is not simply the illegality of the consideration itself, but the overall effect that enforcing or unwinding the agreement would have on the public good.
Conclusion
In conclusion, the principle that consideration must not be illegal, immoral, or contrary to public policy is a cornerstone of contract law. It acts as a necessary safeguard, preventing the courts from being used as instruments to facilitate or reward conduct that is harmful to society. While the categories of illegality, immorality, and public policy have evolved and been clarified over time, most notably in *Patel v Mirza*, the underlying rationale remains constant. The law must ensure that contractual freedom does not extend to agreements that would undermine the rule of law, public morality, or the proper administration of justice. Therefore, the requirement for consideration to be legally and morally sound is not merely a technical rule but a fundamental expression of the social and ethical function of contract law.
References
- Baker v Jones [1954] 1 WLR 1005.
- Everet v Williams (1725) 9 LQR 197.
- McKendrick, E. (2021) Contract Law: Text, Cases, and Materials. 9th edn. Oxford: Oxford University Press.
- Patel v Mirza [2016] UKSC 42.
- Pearce v Brooks (1866) LR 1 Ex 213.
- Stone, R. and Devenney, J. (2017) The Modern Law of Contract. 12th edn. Abingdon: Routledge.
