Where a contract is illegal, the contract is void and the courts will not enforce the contract. Despite the simplicity of the foregoing logic, the concept of illegality in contract law – often used as a defence mechanism in lawsuits – has long vexed students and practitioners alike. As Lady Justice Gloster in Patel v Mirza (“Patel”) remarked, it is “almost impossible to ascertain or articulate principled rules from the authorities relating to the recovery of money or other assets paid or transferred under illegal contracts”. In Singapore, the Court of Appeal (“CA”) in Ting Siew May v Boon Lay Choo (“Ting Siew May”) sought to overcome this difficulty by establishing a two-stage approach to the application of the principles of statutory illegality, common law illegality and restitutionary recovery. In the later case of Ochroid Trading Ltd v Chua Siok Lui (“Ochroid”), the CA affirmed the Ting Siew May framework and the principles encapsulated within. In coming to its decision, the CA in Ochroid also considered and rejected the approach adopted by the UK Supreme Court in Patel, which, essentially, determines whether a contract should be struck down for illegality based on a range of factors.
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