ILLEGAL CONTRACT

• Date: 06 February 2019

(1) "It is the law that a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or if the intention of the parties in making the contract is thereby to promote something which is illegal or contrary to public policy; and an illegal contract is void and cannot be the foundation of any legal right. This proposition of law was clearly enunciated by Brett, M.R., in Herman v. Jeuchner (1885) 15 Q.B.D. 561 at p. 563 as follows: "When the object of either the promise or the consideration is to promote the committal of an illegal act, the contract itself is illegal and cannot be enforced." In Halsbury’s Laws of England, 3rd Edition, Volume 8, page 126 para. 218, the law on the point is also succinctly stated as follows: "A contract is illegal where the subject matter of the promise is illegal or where the consideration or any part of it is illegal". And in William Hill (Park Lane) Ltd. v. Hofinan (1950) 1 All E.R. 1013, it was held that a deed of charge executed in respect of gaming debts must by virtue of the Gaming Act 1835, be deemed to have been executed for an illegal consideration, and was therefore void." - Per Alexander, C.J.N. in Chief A.N. Onyiuke III v. G.E. Okeke Suit No. S.C. 430/ 1974; (1976) 10 N.S.C.C. 146 at 150.

(2) "I am with respect unable to accept the submission of respondent’s counsel. Section 50(1) of the Insurance Act, 1997 not only makes the payment of premium a condition precedent to a valid contract of Insurance, it goes further to say "there shall be no cover in respect of an insurance risk unless the premium is paid in advance." (italicising mine) The fundamental purpose of an Insurance Contract is to give cover for an Insurance risk. A law which says that there is no insurance cover unless premium was prepaid, is in fact saying that the contract is void if no premium was prepaid. In Onyiuke v. Okeke (1976) 3 S.C. 1, the Supreme Court Per Alexander C.J.N. said: "It is the law that a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or if the intention of the parties in making the contract is thereby to promote something which is illegal or contrary to public policy; an illegal contract is void and cannot be the foundation of any legal right. This proposition of law was clearly enunciated by Brett, M.R. in Herman v. Jeuchner (1885) 15 Q.B.D. 561 at 563 as ‘when the object of either the promise or the consideration is to promote the committal of an illegal contract, the contract itself is illegal and cannot be enforced.’ In Halsbury’s Law of England, 3rd Edition, Volume 8, page 126 paragraph 218, the law on the point is also succinctly stated as follows: "A contract is illegal where the subject-matter of the promise is illegal or where the consideration or any part of it is illegal." - Per Oguntade, J.C.A. in Ajaokuta Steel Co. Ltd v. Corp. Ins. Ltd. Suit No. Suit No. CA/A/95/M/2001; (2004) 16 N.W.L.R. (Pt. 899) 369 at 399.

(3) "In defining what an illegal contract or transaction is, the Supreme Court in the case of Alao v. ACB Ltd. (1998) 3 N.W.L.R. (Pt. 542) 339 at page 355; Per Kutigi, J.S.C., stated: "It is the law that a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or if the intention of the parties in making the contract is thereby to promote something which is illegal or contrary to public policy." - Per I.T Muhammad, J.C.A. (as he then was) in Fasel Services Ltd. v. N.P.A. Suit No CA/A/79/2000; (2003) 8 N.W.L.R. (Pt. 821) 73 at 99.

(4) "Section 50(1) of the Insurance Decree No. 2 of 1997 which provides: - "50(1) The receipt of an insurance premium shall be a condition precedent to a valid contract for insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance." The above makes it relevant that before a valid contract of insurance can come into effect, premium must be paid in advance. Where there is non-payment of premium then there is no contract of insurance- See...