A contract recited that the parties had been advised by solicitors and counsel that the Moneylenders Acts did not apply to transactions which were the subject of legal proceedings between them, and went on to provide for a compromise.
Held: There can be a bona fide compromise of an issue as to whether a contract is illegal. Lord Denning: ‘In my judgment, a bona fide agreement of compromise such as we have in the present case (where the dispute is as to whether the plaintiff is a moneylender or not) is binding. It cannot be reopened unless there is evidence that the lender has taken undue advantage of the situation of the borrower. In this case no undue advantage was taken. Both sides were advised by competent lawyers on each side. There was a fair arguable case for each. The agreement they reached was fair and reasonable. It should not be reopened. I agree with the judge below that this agreement of compromise was binding and I would dismiss the appeal.’
Phillimore LJ said: ‘Speaking for myself, I think it is entirely plain that this was a bona fide compromise, and that there is nothing in the evidence here which could make this court say with any confidence that these were moneylending transactions, illegal transactions; and accordingly, as it seems to me, here the court is faced with a bona fide compromise of what was a question of fact. The terms of the agreement are not to be described as colourable. The court ought to be very slow to look behind an agreement reached in such circumstances as these. I cannot think that Mr Jackson has made out anything like a case which would be strong enough to justify this court in looking behind the terms of what was clearly a bona fide compromise, and I also would accordingly dismiss this appeal.’
Lord Denning MR, Phillimore LJ, Roskill LJ
[1972] 2 QB 151
England and Wales
Cited by:
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The parties were Iranian Jews, father and son. The son arranged to export carpets from Iran in contravention of Iranian law. The father and son fell into dispute about their contracts and arranged for the issues to be resolved by the Beth Din . .
Cited – Attorney General v British Museum ChD 27-May-2005
The trustees brought a claim against the Attorney-General seeking clarification of their duties and powers to return objects which were part of the collection in law, but where a moral duty might exist to return it to a former owner. Here drawings . .
Lists of cited by and citing cases may be incomplete.
Updated: 23 October 2021; Ref: scu.180982