Bigos v Bousted [1951] 1 All ER 92
Illegality and withdrawal.
Facts
The defendant, Bousted, wanted to support his wife while she stayed in Italy for her health. He agreed with the defendant that in return for a loan of £150 in Italian currency for this purpose he would deposit a share certificate in a company with the plaintiff as security for the loan. Both parties knew that this agreement was illegal under the Exchange Control Act 1947 s.1(1) and signed documents to disguise this as a loan. The plaintiff later failed to supply the money and refused to return the share certificate. The defendant claimed for the return of his share certificate.
Issues
The plaintiff argued that the contract for the loan was void because it was illegal. Therefore, the defendant could not enforce any of his rights under the agreement. The general rule is that if the parties are in pari delicto, meaning they are equally at fault, the law favours the person resisting the claim. However, the defendant argued that an exception to this rule applied, as he had withdrawn from the agreement before the illegal purpose is carried out.
Decision/Outcome
The court found for the plaintiff. The contract was illegal and, therefore, void. At the time the contract was formed both parties were in pari delicto. However, Pritchard J said that there was a difference between withdrawing due to repentance and withdrawing simply because the contract was frustrated before it was carried out. Here, Bousted had not repented and withdrawn. The contract had simply been frustrated by the plaintiff’s refusal to carry it out. Consequently, Bousted could not recover his share certificate under the contract.
Updated 19 March 2026
This article accurately summarises the facts, issues, and outcome of Bigos v Bousted [1951] 1 All ER 92. The case remains good law as an illustration of the limits of the locus poenitentiae (withdrawal) exception to the illegality defence in contract law.
Readers should be aware of two significant developments. First, the Exchange Control Act 1947, which underpinned the illegality in this case, was repealed by the Currency and Bank Notes Act 1954 and subsequent exchange control legislation, with controls substantially abolished in 1979 and formally removed by the Exchange Control (General Exemption) Order 1979. The statutory context of the case is therefore of historical interest only, though the contract law principles it illustrates remain relevant.
Second, and more importantly, the law on illegality in contract has been substantially reformulated by the Supreme Court in Patel v Mirza [2016] UKSC 51. The Supreme Court moved away from rigid rules (including the mechanical application of the in pari delicto and locus poenitentiae doctrines) in favour of a range-of-factors approach, asking whether enforcing or refusing to enforce the contract would be a proportionate response having regard to the purposes of the relevant prohibition, public policy considerations, and the need to avoid disproportionate consequences. While Bigos v Bousted is still cited in academic discussion and its facts remain a useful teaching example, students should treat its reasoning with some caution in light of the Patel v Mirza framework, which now governs how English courts approach illegality disputes.
