The seller of a quantity of Koi carp sent the buyer an invoice for trout. The supply of Koi carp is chargeable to VAT but the supply of trout is not. When the seller sued for the price, he was met with a plea that the contract was illegal as being a fraud on the Revenue.
Held: At the time the contract was entered into there was no intention to defraud the Revenue and although the subsequent sending of the invoice for trout was an unlawful act, the seller was not relying on that act to recover the price. An intention not to account for VAT did not vitiate it.
Beldam LJ said: ‘In a case in which one party to a contract seeks performance of an obligation under the contract by the other party, it is now well established that the contract entered into with the object of committing an illegal act is unenforceable. If both parties enter that contract with that objective, neither can enforce it. If one of the parties does so and the other is unaware of the illegal purpose the party whose object is illegal cannot enforce the obligation of the other. ‘
Judges:
Beldam LJ
Citations:
Gazette 01-Jun-1994, Ind Summary 16-May-1994, Times 25-Mar-1994
Jurisdiction:
England and Wales
Citing:
Cited – Napier v National Business Agency Ltd CA 1951
The plaintiff sought to sue for wrongful dismissal on a contract of employment under which he was paid andpound;13 salary per week and andpound;6 ‘expenses’, when his expenses could never exceed andpound;1 per week.
Held: The parties had made . .
Cited – St John Shipping Corporation v Joseph Rank Limited 1956
The defendants held a bill of lading for part of the cargo carried on the plaintiffs’ vessel from Mobile, Alabama, to Birkenhead. The vessel was over laden and the plaintiffs were guilty of an offence under the 1932 Act. The defendants relied on the . .
Cited by:
Cited – 21st Century Logistic Solutions Limited (In Liquidation) v Madysen Limited QBD 17-Feb-2004
The vendor sold computers to the defendant, intending not to account to the commissioners for the VAT. The seller went into liquidation, and the liquidator sought payment. The purchaser had been unaware of the intended fraud and resisted payment. . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 15 May 2022; Ref: scu.89296