Some thoughts on the consequences of illegal contracts

Abstract

Few topics in the law of contract have generated as much debate as determining the effects of contracts that infringe statutory or common-law rules. While South African law has in some respects adopted remarkably progressive positions in these debates, especially by displaying flexibility in determining when parties may claim restitution, it also still applies some constructs, rules or maxims in a manner that impedes determining the appropriate consequences of infringing rules or illegality. In this regard it is argued (i) that the concept of an ‘illegal contract’ should be treated with caution, since different commentators automatically link it to different consequences; (ii) that the continued reference to a construct styled the par delictum rule is not helpful when determining whether duties of restitution arise from these contracts; and (iii) that the ex turpi maxim creates the misleading impression that tainted contracts are invariably unenforceable, whereas the reality may be quite different.