Public Policy

What is Public Policy in Contract Law?

Quick Definition

Public policy is a principle that prevents courts from enforcing contracts that would be harmful to society or contrary to the public interest. It acts as a control mechanism to invalidate agreements that, although agreed by the parties, undermine legal or social standards. Its scope is flexible and shaped by judicial discretion.

In Context

Contracts may be struck down on public policy grounds where they encourage illegal conduct, restrict trade unreasonably, or interfere with justice. For example, agreements that involve corruption or attempting to influence court proceedings are unenforceable. In Pearce v Brooks, a contract for hiring a carriage was not enforced because it was intended for immoral purposes, showing how courts refuse to assist wrongdoing. However, modern courts apply public policy cautiously to avoid uncertainty in commercial dealings. In restraint of trade cases, clauses are only valid if they protect a legitimate business interest and go no further than necessary. In exams, the key issue is balancing freedom of contract with the need to protect societal interests.

See Also

• Legality of Object

• Restraint of Trade

• Void Contracts

Learn More

Explore our Contract Law Notes for clearer case breakdowns, structured revision tools, and practical guidance on applying public policy principles in exam scenarios.