A. Introduction

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 428-430

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The rules determining whether a particular agreement is unenforceable by reason of illegality¹are normally divided into two categories, those determined to be contrary to public policy as a matter of common law and those determined to be unlawful by statute. For the most part, this division of the topic is a satisfactory one. Agreements contrary to public policy at common law rest on a judicial determination that the type of agreement in question is sufficiently inconsistent with public policy that it should be treated as unenforceable. In the context of statutory illegality, however, the discretion of the courts to determine public policy is, in theory at least, constrained by the fact that the policy determination with which the agreement is in conflict has been made by the legislature. For example, the determination that contracts restraining one’s ability to trade²should be considered unenforceable rest on a determination of public policy made by the courts themselves as a matter of common law. On the other hand, in the extensive network of regulatory schemes under which the sale and distribution of goods and services of various kinds are commonly regulated, the legislature has articulated public policies of various kinds that may include an express or implied prohibition of cer-

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tain types of agreements. Such agreements are held to be unenforceable on the basis of so-called statutory illegality.

The distinction between common law and statutory illegality becomes more difficult to apply in the context of agreements that involve the commission of acts that constitute statutory offences. At common law, it was determined that a contract to commit a criminal offence, such as an agreement to commit an assault on a third party, is un-enforceable.³The agreement is unenforceable as a matter of common law, even though the offence may be defined by statute, because the determination that the agreement is unenforceable is a decision made by the court that is not preordained by the legislation defining the offence of assault. The category of statutory illegality is reserved, in theory at least, for situations in which it is the statute, rather than the judiciary, that determines that the contract is illegal and unenforceable. In fact, however, it is a rare event that a statutory scheme explicitly stipulates that particular types of agreements are void or unenforceable. The application of the doctrine of statutory illegality...