CASE SUMMARY

An Agreement Made to Avoid Prosecution Is Void: Newell v. Royal Bank of Canada.

A woman forged her husbands signature on 40 cheques totaling more than $58000. He tried to protect her from prosecution by signing a letter prepared by the bank agreeing to assume all liability and responsibility for the forged cheques. The court found that this was an agreement to stifle a criminal prosecution which is an illegal contract and unenforceable. Because the contract was illegal, the husbands agreement to accept responsibility for the cheques was void. He was therefore entitled to get his money back. A merchant may find an arrangement such as the husbands letter very appealing. Such an agreement, however, smacks of blackmail and tries to cover up a criminal act. It may even be considered an obstruction of justice. Any such agreement will therefore be an illegal contract and void.

Questions

Was the Courts decision appropriate? Should the parties be free to make their own arrangements in these circumstances? Explain your reasoning.