Illegality and Frustration in a Contract Case Study

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Victor and Hugo both knowingly entered into a contract to split the proceeds from a felonious action, the contract is not enforceable. In this situation, Victor can even keep the ten percent that he has now offered to pay Hugo instead of the original fifty percent that they had agreed upon. According to the Law Commission Consultation Report 2009, "If a contract has as its object the deliberate commission of a crime, then it is illegal and the courts will not enforce it."

There is substantial case law to support this stance. For example, in Brown Jenkinson & co. ltd. V Percy Dalton ltd. (1957), the court held that "a contract to indemnify for losses suffered as a result of the deliberate commission of the tort of deceit is unenforeceable."

Further, it was found in Anderson v Daniel (1924) that "a contract may be lawful in its formation but performed by the parties in an illegal manner.

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Such a contract will become unlawful."

Since both Hugo and Victor were both aware that in order for Hugo to receive payment, he would have to provide the equipment for Victor to burgle a bank. In this scenario there are no innocent parties to an obviously illegal contract, thus making Victor's obligation to Hugo null and void.

Victor could also claim that because they both knew the split was to occur if they got a big haul he is no longer obligated because the haul was not what was expected. The Restatement of Contracts, Second § 265 states "Where, after a contract is made. A party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the….....

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