pacta illicita

in the law of contract, 'illegal contracts'. If an agreement is unlawful in its aim or its performance, the courts will not enforce the agreement. Recognised categories are:

(1) contracts to commit crimes, torts or delicts;

(2) contracts promoting sexual immorality: see Pearce v. Brooks (1866) LR 1 Ex 213, a rule that has had the effect of inhibiting cohabitation agreements;

(3) pacta de quota litis, or 'agreements to share the proceeds of litigation', a rule that prevents lawyers taking percentage fees;

(4) contracts against justice, such as the purchase of knighthoods other than by subscription to party funds in the usual way;

(5) contracts in restraint of trade. Examples of this type are restrictive covenants, which try to restrain a person from working or trading for a given length of time and over a given territory. They are allowed only if reasonable and in the interests of the parties and the public. They are construed contra proferentem (See contra proferentem rule.

Much more leniency is apparent when the restraint is in a sale of a business selling the goodwill. Again, so-called solus agreements have been upheld whereby, when granting a person some right or title, a condition is inserted tying that person to using the transferor's products and those of no other, although this sort of agreement, if widespread, can be struck at by the law on competition (See competition law). See, generally, Fitch v . Dewes [1921] 2 AC 158, Bluebell Apparel Ltd v . Dickinson 1980 SLT 157, Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd [1894] AC 535.

In all these cases the rule ex turpi causa non oritur actio applies: 'an action does not arise out of an illegal cause.' This can be harsh if property or money has been transferred contrary to some obscure and technical statute and the parties are not equally blameworthy: in pari delic-to. restitution may be allowed in some such cases. In England the innocent party may enforce if the contract is illegal, but there is a collateral warranty and if there has been fraud there can be damages for the fraud. The restitutionary doctrine of recompense in Scots law can operate to compensate an innocent party for work done: Cuthbertson v. Lowes (1870) 8 M 1073; Jamieson v. Watts Trs 1950 SC 265.