Chapter 22 Self-test questions

. What type of approach to illegality was favoured by the majority of the Supreme Court in Patel v Mirza?

A rules-based approach.

A range of factors approach.

An unprincipled approach.

A reliance-based approach.

. What effect did Patel v Mirza immediately have on illegality in contract law?

It made unenforceable all illegal contracts.

It made enforceable all illegal contracts.

It made enforceable contracts whose performance would be unlawful.

It did not immediately change the outcomes reached in contract law.

. Where the making of the contract is prohibited, who may sue on it?

The innocent party.

The wrongdoer.

Both.

Neither.

. Which of the options given may constitute an enforceable contract?

An agreement contrary to statute.

An agreement impliedly prohibited by statute.

An agreement to commit a crime.

None of the options given is correct.

. Select the most accurate statement about the scope of illegality.

The scope of illegality is limited to criminal conduct.

The scope of illegality is limited to morally dubious conduct.

The scope of illegality includes some acts which are not unlawful under the criminal law.

The range of factors approach means that any agreement could be rendered unenforceable for illegality.

. Can a party enforce a lawful contract, the performance for which has been carried out in an illegal manner?

Yes, in all cases.

No, not in any cases.

Yes, provided the illegal act is central to the performance of the contract.

No, unless the illegal act is incidental to the performance of the contract.

. Was the shipowner in St John Shipping Corp v Joseph Rank Ltd entitled to recover their entire freight? Why?

Yes, because the illegal act was merely incidental to the performance.

Yes, because there was no illegal act.

No, because the illegal act was central to the performance.

No, because the contract itself was unenforceable for illegality.

. Why did Miss Hounga's claim for relief in Hounga v Allen succeed, despite her illegal conduct?

Miss Hounga did not need to rely on her illegality to found her claim.

Their Lordships felt sympathy for Miss Hounga.

The statute which grounded the illegality had been repealed.

The balance of policy factors favoured relief being granted.

. Where A has contracted to purchase goods from B, and B discovers A's illegal intentions with the goods, is B entitled to refuse to deliver the goods? Is this optional?

Yes, B is entitled to refuse to deliver at his absolute discretion.

Yes, B is entitled to refuse to deliver, and must refuse to deliver.

Yes, B is entitled to refuse to deliver, and can choose to do so, unless A plans to commit murder with the goods.

No, B must deliver.

. May A, an innocent party to the contract, refuse to perform their contract with B, where B has deliberately devised the contract to enable them to perpetrate a fraud without the knowledge of A?

Yes.

Yes, but A must not rely on the contract in their action.

No, unless A can make out an action in tort.

No, A's only recourse is to seek a criminal prosecution.

. Is there a point at which the court will not conclude that B's intention to commit an illegal act is too remote from the contract itself such that the contract should not be held to be enforceable by B?

Yes.

No.

. Can property pass where it is the subject matter of an illegal contract?

Yes.

No.

. What is the effect of illegality on a contract?

It renders the contract void.

It renders the contract voidable.

It frustrates the contract.

It renders the contract unenforceable.

. Why was it said in Singh v Ali that the transferor of property under an illegal contract may not recover that property once the contract is executed?

The contract has been rendered void.

The court chooses not to confiscate the property.

Illegal contracts are not enforceable.

There is nobody who can assert title better than the recipient.

. Why should the claimant, seeking to go around an illegal contract, be prevented from bringing non-contractual claims which substantively seek the same relief as an unavailable contractual claim?

To enhance deterrence of illegal activities.

To ensure that the law is not contradictory.

To remove a 'safety net' in the event the contract is unenforceable.

All of the options given are valid reasons.

. When may a party successfully withdraw from an illegal transaction, and recover property transferred pursuant to that scheme?

Any time before a claim is brought.

Any time before property passes.

Within the 'time for repentance'.

Only once the illegal conduct has been carried out.

. Which statute made betting contracts void?

The Gaming Act 1845.

The Gambling Act 2005.

The Gambling (Licensing and Advertising) Act 2014.

The Statute of Frauds 1677.

. What is the effect of a term of a contract which is tainted by illegality?

It renders the whole contract a nullity.

It makes the whole contract a criminal enterprise.

If the offending provision can be severed, the rest of the contract remains valid.

Something else.

. What is the prima facie effect of a covenant in restraint of trade?

It is enforceable.

It is void.

It is voidable.

It is unenforceable.

. When might a covenant in restraint of trade be upheld?

The covenantee just needs to show that it is reasonable as between the parties to it.

The covenantor just needs to show that it is not unreasonable in the public interest.

The covenantee shows that it is reasonable as between the parties to it; and the covenantor does not show that it is unreasonable in the public interest.

It is not possible to uphold covenants in restraint of trade.

. When will a restraint of trade clause be enforced against an employee?

Whenever the employee intends to compete with the employer.

Where it is necessary to protect a proprietary right of the employer.

Whenever the clause is incorporated into the employee's contract of employment.

Only where the employee is in a managerial or higher role.

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