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Fisher v Bridges (1854) 3 El & Bl 642

A covenant enacted in relation to an illegal contract is unenforceable

Facts

The defendant agreed to buy land from the plaintiff. According to the defendant, before the making of the deed, which was subject to a mortgage, the plaintiff was aware that the land would be exposed to sale and sold by way of lottery in an illegal manner contrary to statute. Part of the purchase money was unpaid by the defendant and the defendant made a covenant for payment. The plaintiff sued for payment on the basis of this covenant.

Issue

At first instance, the Queen’s Bench gave judgment for the plaintiff. The defendant appealed. The key issue was whether the covenant was enforceable on the basis of an underlying contract which was subject to an illegality. Before the appeal court, the plaintiff argued that it was not enough that it knew that the defendant intended to make an illegal use of the purchased land; it was necessary to also show that the plaintiff also intended the land to be used illegally.

Held

The Exchequer Chamber reversed the judgement of the Queen’s Bench. It found that the covenant was clearly given by the defendant to secure the payment of a part of the purchase or consideration money for the lands the subject of the agreement. Accordingly, it was given as a security for payment of a debt which was tainted with illegality. Therefore, because the law would not enforce the payment of the debt, it would not enforce the payment of the security contained in the covenant because it sprung from, and was the creature of, an underlying illegal agreement.


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