Self-test questions: Illegality

. Which one of the following types of 'statutory illegal' contract is enforceable by both parties?

A type of contract in which one party participates in illegal activity to the knowledge of the other contracting party, who raises no objection.

A type of contract not impliedly prohibited by the statute, but performed by one party in an illegal manner.

A type of contract for which the penalty provided by the statute is considered to be sufficient sanction for the infringement in question.

A type of contract expressly prohibited by the statute.

A type of contract not expressly prohibited by the statute, but performed by one party in an illegal manner.

. Which one of the following agreements is probably not illegal under either statute or common law?

A contract for sale of goods that provides that all disputes between the parties shall be submitted to arbitration rather than the jurisdiction of the courts.

A maintenance agreement between husband and wife under which the wife promises not to apply to the court for maintenance.

A contract made for the purpose of committing a crime.

A contract for the sale of the title of knighthood.

A contract to transfer all parental responsibility for a child from a person, who has parental responsibility for that child, to another person.

. Which one of the following statements relating to the restraint of trade doctrine is true?

Contracts in restraint of trade contravene free competition and the parties' freedom to contract and are thus void.

A contract in restraint of trade is valid if the party seeking to enforce the contract establishes that the restraint is fair between the parties.

In order to enforce a contract in restraint of trade, a party must show that the restraint is not contrary to the public interest.

Whether a contract in restraint of trade is fair between the parties must be assessed in the light of whether there is a legitimate interest to be protected and if so, whether the restraint imposed is reasonable in order to protect that interest.

Generally, the initial burden of proof rests on the party seeking to enforce the contract to show that the restraint of trade provision is not contrary to the public interest and, if sustained, it is then for the party resisting enforcement to show that the provision is unreasonable or unfair.

. Which one of the following contracts in restraint of trade is most likely to be adjudged by a court to be illegal?

An exclusive dealing agreement that provides that, in return for a discount, a distributor shall not deal with any competitor of the vendor within the two-year duration of the contract.

A contract for the sale of a business that provides that, in order to preserve the goodwill of the business, the vendor shall not compete with the purchaser within two years from the date of the contract.

A contract for employment that prohibits the employee disclosing confidential information during its employment unless in the public interest.

A contract for employment that prohibits the employee disclosing trade secrets or poaching customers obtained during the employment within two years from the date of leaving.

A contract for employment that prohibits the employee from working in any capacity for any competitor of the employer within seven years from the date of leaving.

. Which one of the following statements is not true?

The illegal part of a contract may be severed from the rest of the contract if it is not the main subject matter of the contract and if its severance is verbally and grammatically possible.

Whether a party to an illegal contract has any rights under that contract is subject to an analysis based on a 'range of factors' approach.

Contracts tainted with illegality are void.

Following Patel v Mirza [2016] UKSC 42, [2017] AC 467, the courts can be said to adopt a more flexible approach to the enforceability of illegal contracts than that which was previously taken.

Benefits transferred under an illegal contract may be recoverable.

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