Law 5110 Study Guide - Quiz Guide: Specific Performance, The Seller, Fareham
When is a contract prohibited?
Statutory illegality
All jurisdictions contain provisions that prohibit the conclusion of certain contracts. These
contracts cannot be enforced and will often be declared void if brought before a court. However
this must not always be the case. Sometimes such a contract is not avoided but sanctions are
impose, especially if one party didn’t know about the illegality of the contract.
Contracts against public policy and good morals
If a contract is against public policy or good morals, it is void (FR: Art. 6, GER: §134, NL: Art.
3:40). Public policy refers to fundamental principles while good morals refer to common decency
of reasonable persons. There are different categories:
- Contracts that restrict personal, artistic or economic freedom cannot be enforced. This is
the case if someone waives his fundamental rights, promises all his future works to a person
or restricts the right to start a business.
- Contracts that violate the interest of the community are not allowed. Examples are
prostitution, surrogate motherhood (which is forbidden in Germany and France but allowed
in England and the Netherlands if it is altruistic).
- Other contracts that cannot be classified.
The effects of a prohibited contract
If a prohibited contract is already performed and then declared void, avoidance doesn’t lead like
normally to restitution of the already supplied goods. In this case, the in pari delicto rule prevents
parties that have concluded prohibited contract from restitution.
However, there are exceptions to this rule. If only one party is responsible for the illegality or no
fundamental principles are breached, the contract must not be avoided. Whether recovery is
possible or not therefore depends on a range of factors.
A fundamental difference between civil and common law lies in performance. In civil law,
performance in natura can be claimed. In common law, monetary compensation is enough.
I- Civil law
In civil law parties can claim specific performance of the contract. This is because a contract is
seen as a moral device. It depends on the contract when such a claim can be brought. Also, the
performance must exactly match what the parties agreed upon. Even in a case of a futile defect,
specific performance can be claimed.
Impossibility of performance
Exceptions to this rule are cases of impossibility. Sometimes it doesn’t make sense to ask for
specific performance:
- Absolute impossibility: Exists if it is objectively impossible to perform because for example
the good doesn’t exist anymore (e.g. burnt-down house) or the aim of the contract was
already achieved (e.g. repair of something that is not broken). The question when
something is impossible is related to the nature of the good. The rule of genus non perit
Document Summary
All jurisdictions contain provisions that prohibit the conclusion of certain contracts. These contracts cannot be enforced and will often be declared void if brought before a court. However this must not always be the case. Sometimes such a contract is not avoided but sanctions are impose, especially if one party didn"t know about the illegality of the contract. If a contract is against public policy or good morals, it is void (fr: art. Public policy refers to fundamental principles while good morals refer to common decency of reasonable persons. Contracts that restrict personal, artistic or economic freedom cannot be enforced. This is the case if someone waives his fundamental rights, promises all his future works to a person or restricts the right to start a business. Contracts that violate the interest of the community are not allowed. Examples are prostitution, surrogate motherhood (which is forbidden in germany and france but allowed in england and the netherlands if it is altruistic).
