Restitution on illegal Contract
 
“illegal contract”: CL: agreement which is forbidden either expressly or impliedly by the law, be it common law or statute, for reason of public policy.

illegal=void, void≠illegal

Malaysian - Contract Act– did not distinguish illegal/void contract

Section 24 – where consideration/object of an agreement is unlawful

General Rule: No person who is aware of the illegal nature of an agreement can enforce it or recover a benefit transferred under it.

#Singma Sawmill: Raja Azlan Shah “there was…an intention to make use the lease or agreement for an unlawful purpose…In such cases any party to the agreement who has the unlawful intention is precluded from suing upon it. Ex turpi cause non oritur action. The action does not lie; not for the sake of the defendant but because the court will not lend its assistance to such a plaintiff. The court will look behind such cosmetic arrangements to see the real intention”

General Rule criticized:
- it is suggested that the foundation of the ex turpi causa rule is public policy and that being so the rule must be applied pragmatically and flexible rather than rigidly and automatically.

Exception to the GR

1) Law of contract
- where it is found through the interpretation of the statute – infringement is not such a nature as to leave the PF remediless – the court will look at the intention of the legislature enacting such provision.

#YANGO PASTORAL COMPANY PTY LTD V FIRST CHICAGO AUSTRALIA
 
#MALAYAN BANKING BHD v TEGUH CONSOLIDATED