Civil Engineering Reference
In-Depth Information
held to be illegal the court will not interfere as between the rights of the parties to the
contract. This is consistent with the general principle that the courts will not assist
the party who is in breach of a statute, albeit that the corollary of this is that the other
partytothecontractisentitledtokeeptheadvantagegainedbythem.hismaybe
regarded as unfortunate where the parties were equally aware of the illegal nature of
the transaction.
If the contract is not itself illegal, but has a connection with some other illegal trans-
action,thecontractissaidtobetaintedwithillegality.Ifoneofthepartieswasunaware
of the illegality, they will be entitled to enforce their rights under the contract. How-
ever, should they fail to resile from the contract, after becoming aware of the illegality,
they may be held to have acquiesced. As a consequence, they may not be entitled
to enforce their rights under the contract or be entitled to an equitable remedy, see
Dowling & Rutter
v
. Abacus Frozen Foods Ltd (No. 2)
(2002).
Whereonlypartofacontractisillegal,thatpartmaybecapableofbeingsevered
from the remainder of the contract. In a building contract which contains the power to
instruct variations it may well be possible to instruct a variation to remove the 'offend-
ing' part of the contract. he question of severance is a complex one upon which there
is little Scottish authority, though the English authorities on this subject are likely to
be regarded as highly persuasive. Whether or not an illegal provision is capable of
being severed will depend upon the nature of the illegality.
The contract may be valid, but the works executed under it illegal. For example,
in
Townsend (Builders) Ltd
v.
Cinema News and Property Management Ltd
(1959), the
works as built, but not as specified, contravened a byelaw. In the rather special circum-
stances of that case the contractor was held to be entitled to recover payment, though
itwouldappearthatbutforthosespecialcircumstancesthecontractorwouldnothave
succeeded. In
Robert Purvis Plant Hire Ltd
v.
Alex Brewster & Sons Ltd
(2009), the use
specified in a lease was not permitted by law as there was no planning permission for
such use. However, the court held that this did not affect the binding nature of the
lease as the planning status of the site was known at the time the lease was signed.
If a contractor carries out work in the absence of necessary consents they take
the risk that the work is illegal and they may be unable to recover payment for that
work, see
Designers and Decorators (Scotland) Ltd
v.
Ellis
(1957). The contract will
often expressly oblige the contractor to give statutory notices and comply with statu-
tory requirements, and may also provide for the circumstances in which there is a
change in the statutory requirements. For example, clause 2.1 of the SBC makes such
provision.
9.8 Insolvency
9.8.1 General
Insolvency, in itself, does not affect a contract, but has potentially far-reaching impli-
cations that merit some examination within the conines of this topic.
The insolvent party may be unable to implement their obligations under the con-
tract,whichwouldentitletheotherpartytowithholdperformanceoftheirobligations
