ILLEGALITY

concerned with the nature or substance

of the agreement rather than how the
agreement came into being..
 Void & Illegal Contracts
 Void: the K can be formed and performed by
the parties so long as they keep the terms of
their agreement. The law does not prevent their
formation. If something however goes wrong,
the K is unenforceable.
 Illegal: these are k that should not be made in
the first place OR are performed in such a
manner as to breach the law. They are
unenforceable.
CLASSES OF ILLEGAL CONTRACTS

1. Statutory Illegality
i. Express / Implied Prohibition
ii. Contracts Illegal on Performance
2. Contracts Illegal at Common Law
3. Contracts Void by Statute
4. Contracts Void at Common Law
 1. Contracts Illegal by Statute
i. Express Prohibition
 Example:
 Alcoholic Drinks Control Act, Chapter 4 2010
 S. 28: prohibits the sale, supply or provision of
alcohol to persons under the age of 18. - Penalty
for the offence: upto Kshs.150,000 OR 1 year
imprisonment OR both
 S. 30: No selling alcoholic drinks in vending
machines.
 Penalty : Kshs.100,000 OR 1 year imprisonment
OR both
 ii. Implied prohibition
 Penal code ; Sexual Offences Act
Is there an implied prohibition on prostitution ?
ii. Contracts Illegal on Performance

 There may be statutory requirements regarding

performance which makes the contract illegal
on performance.
 The K may be legitimately formed but become
unenforceable because the manner in which it is
performed is illegal
 Anderson Ltd v Daniel
A statute required sellers of fertilizer to issue
buyers with invoices listing the chemicals
contained in the product. The buyer was
supplied with the fertilizer without the invoice
required by the Statute. The buyer failed to pay
and the seller sued.
 Held: although the K itself was valid, he could

not recover the price since the absence of the

invoice made the K illegal.
 Mohamed v AG [1990] KLR 146
 Five people were prosecuted for smuggling 135 bags
of coffee. The court ordered that the coffee be sold by
public auction. The plaintiff claimed he had bought
the coffee but the police had refused to release it to
him. Instead, they released it to the Tz government.
The plaintiff adduced evidence to show that he had
contracted to sell the coffee for kshs. 405,000. He
sought damages
 Held: To deal in coffeee, a licence had to be issued by
the Coffee Board of Kenya. The plaintiff had no such
licence. The resale agreement was therefore tainted
with illegality and could not be used as the basis for
assessing damages
 Assignment
 34 (1) of the of the Advocates Act provides in part: “No
unqualified person shall, either directly or indirectly, take
instructions or draw or prepare any document or
instrument...”
 Read the entire section and these cases.
Kajwang v Law Society of Kenya [2002] KLR 1
National Bank of Kenya Ltd v Wilson Ndolo Ayah [2009]
eKLR
National Bank of Kenya Limited v Anaj Warehousing
Limited [2015] Supreme Court, Petition No 36 of 2014
What is the purpose of the provision?
If a lawyer without a practicing certificate drafts a
conveyance, is it valid?
A non lawyer?
Kenya Airways Ltd v Satwant Singh

 Employment without work permit

 Contracts Illegal at Common Law

 Contracts which courts will not enforce because

they are prejudicial to the general good
 It is a rule of public policy that one should not
benefit from committing a crime.
 Courts will not assist such a person to recover
the fruits of his crime/illegality
i. Contracts to Commit a crime, tort or
a civil wrong
Dann v Curzon (1910) 104 LT 66
 The plaintiff was hired to start a riot in a

theatre, which he did.

 He was not paid the ₤20 he had been promised

and he sued.
 Held: an agreement to commit a crime cannot

be enforced.
Beresford v Royal Insurance Company Ltd

* The rule also applies to a person’s personal

representatives
 A man insured his life for 50,000 pounds. 2 or 3

minutes before his policy was invalidated for

non payment of the premium, he shot himself.
At the time, suicide was a crime in the UK. The
K provided that the company would pay his
representatives even if he committed suicide.
His executor claimed the payment.
 Held: could not recover
ii. Contracts which promote corruption
in public life
 Parkinson v College of Ambulance
 The secretary of a charitable organization told
the plaintiff that he could procure a knighthood
for him if he made a contribution to the society.
He contributed ₤3,000 but received no
knighthood. He sued to recover his money.
 Held: he could NOT recover since the substance
of the K was illegal.
Priscilla Nyambura v Marathon Corpn
& 3 Others (eKLR)
 Plaintiff sued the Defendants for refusing to
give her a 1% commission for influencing the
award of a tender. She claimed she acted as
their agent by “pushing” the deal with the
“right people “ at the Department of defence.
 Defence: The contract breached the law (Anti

Corruption & Economic Crimes Act, Public

Procurement & Disposals Act) and was contrary
to public policy.
Outcome: The plaintiff’s suit was struck out.
 Corruption in public life
 the office must be public in the sense that it is
funded by public funds.
Re Miriams (1891)
 It was held that a clergyman was not subject to

this restriction.
Qns:
 What is a public office?

 Is the problem of corruption limited to public

life?
 Further Reading
Anti Corruption & Economic Crimes Act
 What is corruption defined as?

 Does the Act address the problem of corruption in

private life?
Public Officer Ethics Act, Cap 183
 How does the Act address the problem of corruption?

 Proceeds of Crime and Anti-money Laundering Act

in 2009
 Effect on contracts tainted with corruption?

 Bribery Act. Leadership & Integrity Act

 iii. Contracts to defraud revenue

Samura Engineering Ltd & 10 Others v Kenya

Revenue Authority

“Payment of taxes is the obligation of every

citizen. It is a means by which we all support
the state and its function for our own
welfare. Tax evasion is a cancer the undermines
the State and the constitutional structure thus
law enforcement and tax collection agencies
must have the tools that can effectively deal
with this vice”
 ...defrauding revenue
Napier v The National Business Agency
 The plaintiff’s salary was set low. He was paid

more for expenses despite the fact that his

expenditure was low. The arrangement was
designed to avoid income tax since expenses are
not taxed. He was fired and not paid all his
wages. He sued.
Held: the K was tainted with illegality and was
therefore unenforceable.
 Miller v Karlinski
 Under an employment contract, an employee
was to receive 10 pounds weekly. He was to be
refunded his expenses. He was allowed to
include the tax payable on his payment as an
expense. He was not paid for 10 weeks and he
sued. It was found that 17 pounds of what he
claimed as expenses was what he should have
paid as income tax
 Held: Illegal. Fraud on the revenue.

TASK: Review Constitutional provisions on

taxation.
iv. Contracts which interfere with the
course of justice
 Examples: contracts to conceal crimes or
withhold evidence.
Kearly v Thompson
 In a bankruptcy hearing, K paid the lawyer ₤40
not to appear at the public examination & not to
oppose the order from his friend’s discharge
from bankruptcy
 He later tried to recover the money he had paid.

 Held: the K was against public policy. He could

therefore not recover.
 v. Contracts which prejudice public
safety
i. Contracts between Citizens of countries at war

ii. Contract to break laws of a foreign friendly

nation.
Foster v Driscoll
contracts to smuggle whisky to the US. Prohibition
laws. Alcohol sale was legal in England.
Outcome: He couldn’t recover
vi. Contracts with a sexually immoral
base (contra bonos mores)
 Pearce v Brooks (1866)
 Owner of a carrige who allowed it to be used by

a prostitute who was scouting for passengers

could not sue to recover
Benyon v Nettleford (1850)
There was an arrangement under which a woman
agreed to become a man’s mistress.
Held: the arrangement was illegal &
unenforceable.
 Task
Questions:
 Is public morality constant or does it change? It

has been suggested that this head requires

courts to apply the moral standards of the day.
 Is a cohabitation arrangement immoral? Illegal?

Can you recover property you buy under the

arrangement?
Read : Tinsley v Milligan