Corruption, Contracts and Common Law Illegality

28 Pages Posted: 13 Jul 2018 Last revised: 19 Jul 2018

See all articles by Gerald Alloway

Gerald Alloway

Victoria University of Wellington, Faculty of Law, Student/Alumni

Date Written: July 13, 2018

Abstract

Corruption is historically dealt with by criminal law. This paper queries whether the harm caused by corruption may be better dealt with through the law of contract. The author examines whether a contract procured through bribery could rightfully be “illegal in law” under s 71 of the Contract and Commercial Law Act 2017; either by falling within the doctrine of implied statutory prohibition or common law illegality. This paper argues that common law illegality is outdated in light of the UK Supreme Court’s ruling in Patel v Mirza. New Zealand should take a new approach to corruption and common law illegality to better comply with best international contract law practice, as contained in the UNIDROIT principles, and New Zealand’s international obligations. The paper concludes that if the test from Patel v Mirza is adopted, there are circumstances where a contract procured through bribery should be considered “illegal in law”; when such an agreement is against public policy to enforce. Such a measure would not prejudice parties’ ability to obtain relief from the agreement, and the broad discretion of a court under the Contract and Commercial Law Act 2017 to grant said relief is capable of dealing with a broad range of effects that bribery may have on contractual agreements.

Keywords: Contract and Commercial Law Act 2017, common law illegality, ex turpi causa, corruption, bribery, contract procurement, United Nations Convention Against Corruption, UNIDROIT Principles, Patel v Mirza, Secret Commissions Act 1910, statutory illegality, implied statutory prohibition.

JEL Classification: k00.

Suggested Citation

Alloway, Gerald, Corruption, Contracts and Common Law Illegality (July 13, 2018). Victoria University of Wellington Legal Research Paper, Student/Alumni Paper No. 29/2018. Available at SSRN: https://ssrn.com/abstract=3213184

Gerald Alloway (Contact Author)

Victoria University of Wellington, Faculty of Law, Student/Alumni ( email )

PO Box 600
Wellington, Victoria 6140
New Zealand

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