The New Provisions on Illegality in the UNIDROIT Principles 2010

As in all legal systems, also under the UNIDROIT Principles of International Commercial Contracts (hereinafter: the “UNIDROIT Principles”) it has always been understood that in order for a contract to be binding not only must the parties have concluded it without error and constraints but also its content and performance must not violate principles and rules of public policy or conflict with good morals. However, while avoidance of contracts for mistake, fraud, threat and gross disparity was specifically dealt with right from the first edition of the UNIDROIT Principles,1 the invalidity of contracts arising from illegality or immorality was expressly excluded from the scope of the UNIDROIT Principles in both the 1994 and the 2004 editions 2 and referred to the applicable domestic law on account of “the inherent complexity of questions of [...] public policy and the extremely diverse manner in which they are treated in domestic law.” 3