Contracts undermining the Criminal Justice System
Contracts which undermine the system of justice are unenforceable. Contracts prejudicial to the administration of justice are not enforced.
A contract not to make a criminal complaint is invalid. The public interest in punishing crime requires that private parties may not settle criminal complaints.
It is an offence to conceal an arrestable offence. An arrestable offence is any crime or offence, which is potentially subject to imprisonment of five years or more. Under the Criminal Law Act 1997 it is an offence, where a person knows that an arrestable offence (carrying more than 5 years’ imprisonment) has been committed, to accept or agree to accept any consideration for not disclosing information which might be of material assistance in securing the prosecution, other than for the making good of loss or injury caused by the offence, or the making of reasonable compensation for that loss or injury.
It is not clear whether a contract for the making good of loss or injury caused by the offence is necessarily enforceable. The fact that it is not criminal, does not preclude the possibility that it might be held to be against public policy. Equally, an agreement in relation to a non-arrestable offence is not necessarily valid.
It is not lawful to compromise a prosecution. It is not possible to agree to withdraw a criminal complaint, at least in relation to more serious offences and possibly all offences.
Settlement of Civil Disputes Lawful and Encouraged
It is possible to compromise or settle a civil dispute. Contracts to settle civil proceedings are generally enforceable. Indeed, they are positively encouraged by the legal system.
There is a very low threshold for the maintenance of litigation. The courts will not readily strike out a claim as an abuse of process, even if its merits are not immediately apparent. They take the view that the merits should not be pre-judged without the opportunity for a full hearing.
Exceptionally, litigation may be found up for to be so lacking in merit or motivated by extraneous circumstances as to be an abuse of process. Where a settlement derives from an abuse of process, it would be illegal and /or unenforceable.Apart from these exceptional circumstances, the settlement of a claim which in fact lacks merit is valid.
Supporting Litigation without a Legitimate Interest
Contracts which encourage speculative litigation are not enforceable. An agreement to fund some other person’s litigation is void. The reasoning behind the principle is that to permit funding would encourage speculative litigation.
A person who assists another to maintain or defend proceedings without having a bona fide interest in them, (independent of that of another party), acts contrary to public policy. An agreement with another person for any form of benefit, whether it would be a share of the proceeds of litigation or a promise of remuneration or the transfer of money or assets, in this case, is invalid.
Maintenance is improperly facilitating and encouraging litigation by giving aid to one party to bring or defend a claim without a legitimate interest on the part of the funder. The interest must be independent of that other person. Maintenance is itself unlawful and agreements giving effect to it are not enforceable.
Maintenance was defined at common law as improperly stirring up litigation and strife by giving assistance to a party, to bring a claim without just cause or excuse. Technically, it is a crime at common law, although it is rarely if ever prosecuted in modern times. The principles have been reaffirmed in recent years by the Irish courts.
There are exceptions to the principles of maintenance. A charitable motive may be a good defence. In many cases, there may be a legitimate interest in supporting litigation. An organisation such as a trade union may support its members in taking legal action in some cases. Where the litigation impacts on a wider group, it may have a legitimate interest in so doing.
Champerty is unlawful at common law. It is where a person, other than the litigant stands to gain from litigation. Agreements, including contingent legal fees, fee sharing and assigning a right to litigate may be void under this principle.
So, called heir locator agreements are purported contracts by which one person is to be paid or receive a share, in return for assistance or information given to another, in order to obtain an interest in a deceased’s estate, to which that other is entitled.
The court tends to hold such agreements as being contrary to public policy and champertous in so far as they relate to litigation assistance. A contract to give information only in return for a payment or share of the assets may be enforceable. The principle applies to both Irish estates and the estates outside Ireland.
Contingency Agreements I
A contingency fee arises where a lawyer agrees to make the payment of his fees conditional on the success of the litigation concerned. Agreements, including contingent legal fees, fee sharing and assigning a right to litigate may be champertous under the above principles.
There are limitations to this principle. A lawyer may conduct litigation on the basis that he will be paid his usual fee if he wins, but not if it loses. The modern status of champerty has been challenged in Ireland, given that it is ancient and somewhat uncertain scope. It has been largely reaffirmed by the courts.
In England, contingency fee arrangements are valid by statute, subject to conditions. The courts have come to regard them as consistent with public policy.
Contingency Agreements II
Some courts have upheld agreements by which lesser fees or no fees are paid, where litigation is unsuccessful. This approach has been criticised in other cases. Some courts have precluded the recovery of a higher fee, on the basis that the litigation is successful.
In Ireland, contingency fees are implicitly invalid under the Attorneys and Solicitors Act 1870. The Solicitors legislation prohibits a solicitor from acting in return for a fixed percentage of the damages recovered. Contracts to this effect, are unenforceable.
Agreements to share legal fees with third parties are invalid and are prohibited by professional practice rules. The purpose is to discourage the brokering of litigation.
Effect on Litigation
Where there is an unlawful contract to fund another’s litigation, the contract will be invalid as between the parties and cannot be enforced. This does not necessarily affect the underlying litigation. The fact that there may be some arrangement in relation to financing the litigation is not generally enough to stay or dismiss the legal action.
If a party successfully defends proceedings which have been financially supported in an unlawful manner, that party may sue the persons who have supported the proceedings for the loss suffered, including costs awarded and not recovered.
The courts retain an inherent power to strike out or stay proceedings as an abuse of process. In an appropriate case, they may do so, where proceedings have been maintained contrary to the common law prohibitions. Exceptionally, proceedings may be struck out or stayed, where no other remedy would be adequate to prevent the abuse of process.
Assignment of Bare Claim to Litigate
It is possible to assign certain claims, which are enforced by a legal claim only. These are so-called “choses in action”. An assignee of a legal right must have a genuine commercial interest in enforcing litigation for its own benefit. Many claims such as debts and receivables are very commonly assigned, absolutely by way of security.
As set out in the article on the assignment of contractual rights, contracts for the assignment of a “bare” legal right of action, without another proprietary or commercial interest of the assignee in the matter, are invalid. If there is a genuine commercial interest in the subject of the assignment, it is valid.
The following types of contracts are deemed void.
- contracts to oust the Jurisdiction of Courts
- contracts subverting marriage
- contracts in restrain to trade
They have less serious consequences than those in the above categories. The types of contract discussed in the previous sections, are unlawful at common Law. The above contracts are void rather than unlawful or illegal.
There is less support in modern cases for the distinction between void and illegal contracts. In many cases, the consequences are very similar. Void contracts are treated less severely. It is arguable that the principle of severance is available only in respect of void contracts.
Contracts Excluding the Jurisdiction of the Civil Courts
Contracts to remove or “oust” the jurisdiction of the courts are void as being against public policy, as they deny the fundamental right to have a dispute. There is a constitutional right of access to the courts. Contracts which limit this right, are void unless they qualify as valid arbitration or mediation agreements.
The parties may not prevent the review of legality by the courts or substitute a non-judicial body, to have final say on a dispute which requires the determination of a legal issue
Where, for example, the rules of a private club seek to make a tribunal within the club, the final arbiter of a dispute, the agreement is likely to be void in so far as it ousts the jurisdiction of the court.
Arbitration and other ADR Permitted
A valid arbitration clause is an apparent exception to the above principle. The courts have long accepted that it is valid to nominate a body/ tribunal to determine matters in dispute, provided that the exhaustion of the arbitration clauses is effectively a pre-condition to the right to take legal action.
Arbitration clauses are valid in principle, unless that they purport to close off recourse to the courts entirely. The arbitration legislation permits parties to apply to the court to restrain legal proceedings, where there is a valid arbitration agreement in place.
This type of clause does not completely oust the jurisdiction of the courts. The courts retain the right to review application agreements on a point of law.
Arbitration and other alternative dispute resolution processes are encouraged and regulated by legislation. The 2010 legislation has given the court an enhanced role to arbitration.
References and Sources
Irish Textbooks and Casebooks
Clark, R. Contract Law in Ireland 8th Ed. (2016) Ch. 14, 15
Friel, R. The Law of Contract 2nd Ed, (2000)
McDermott, P. Contract Law (2001) 2nd Ed (2017) Ch. 15
Enright, M. Principles of Irish Contract Law (2007)
Clark and Clarke Contract Cases and Materials 4th Ed (2008)
English Textbooks and Casebooks
Poole, J. Casebook on contract law. (2014) 12th edition
Stone and Devenney, The Modern Law of Contract 10th Ed (2015)
McKendrick, Contract Law 10th Ed (2013)
Chen-Wishart, Contract Law 5th Ed (2015)
Anson, Reynell, Beatson, J., Burrows, Cartwright, Anson’s law of contract. 29th Ed (2010)
Atiyah and Smith, Atiyah’s introduction to the law of contract. 6th Ed.
Chen-Wishart, M. (2015) Contract law. 5th Ed.
Cheshire, Fifoot and Furmstons, Furmstons and Fifoot Cheshire, Fifoot and Furmston’s law of contract. OUP.
Duxbury, Robert (2011) Contract law. 2nd Ed.
Halson, Roger (2012) Contract law. 2nd Ed.
Koffman & Macdonald’s Law of Contract. 8th Ed. (2014)
O’Sullivan, Hilliard, The law of contract. 6th Ed. (2014)
Peel, and Treitel, The law of contract. 13th Ed. (2011).
Poole, J.Casebook on contract law. 12th Ed. (2014).
Poole, J. Textbook on contract law. 12th Ed. (2014)
Richards, P Law of contract. 10th Ed. (2011)
Stone, R. The Modern law of Contract. 10th Ed. (2013)
Treitel, G. H. An outline of the law of contract. 6th Ed (2014).
Turner, C Unlocking contract law. 4th Ed. (2014).
Upex, R. V., Bennett, G Chuah, J, Davies, F. R. Davies on contract. 10th Ed. (2008).
Stone,Devenney, Text, Cases and Materials on Contract Law 3rd Ed (2014)
McKendrick, Contract Law Text, Cases and Materials 6th Ed (2014)
Stone, R, Devenney, J Cunnington, R Text, cases and materials on contract law. 3rd Ed (2014)
Burrows, A. S. A Casebook on Contract. 4th Ed.
Beale, H. G., Bishop, W. D. and Furmston, M. P. Contract: cases and materials. 5th ed. (2008)
Blackstone’s Statutes on Contract, Tort & Restitution 2017 (Blackstone’s Statute Series)
UK Practitioners Texts
Chitty on Contracts 32nd Edition, 2 Volumes & Supplement (2016)
The above are not necessarily the latest edition.
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