Legal Definitions - in pari delicto

The Latin phrase in pari delicto translates to "in equal fault." This legal doctrine generally prevents a party from recovering damages or obtaining relief from a court if that party was equally responsible for the wrongdoing or illegal act that led to the dispute. Essentially, if both sides are equally culpable, the law may decline to intervene and help either party, reflecting the principle that courts are hesitant to assist those who come before them with "unclean hands." This doctrine is commonly applied in contract and tort law.

Here are some examples to illustrate this concept:

• Illegal Contract:

  Imagine two individuals, Alex and Ben, enter into a contract where Alex pays Ben a large sum of money to illegally import restricted goods. Ben takes the money but never delivers the goods. Alex then sues Ben to get his money back.

  A court would likely find Alex and Ben to be in pari delicto. Both parties willingly participated in an illegal contract. Because Alex was equally at fault for entering into and attempting to execute an unlawful agreement, the court would probably refuse to order Ben to return the money, leaving both parties to bear the consequences of their illegal actions.

• Joint Fraudulent Scheme:

  Consider a scenario where two business partners, Carla and David, conspire to create false financial statements for their company to secure a large, fraudulent loan from a bank. When their scheme is discovered, and the bank sues them, Carla tries to sue David, claiming he was the mastermind and demanding compensation for her legal fees and reputational damage.

  In this situation, a court would likely determine that Carla and David are in pari delicto. Both actively participated in the fraudulent scheme, intending to deceive the bank. Even if Carla argues David had a larger role in planning, their shared intent and actions in committing the fraud mean they are equally culpable in the eyes of the law, and the court would likely deny Carla's claim for damages against David.

• Unlawful Business Practice:

  Suppose two competing software companies, "CodeCrafters" and "LogicLabs," secretly agree to fix prices for their services, ensuring they always bid higher than market rates on government contracts and then split the inflated profits. After several successful bids, the CEO of CodeCrafters believes LogicLabs is taking a disproportionately larger share of the illegal profits and sues LogicLabs for breach of their secret agreement.

  Here, both CodeCrafters and LogicLabs are in pari delicto. They willingly engaged in an illegal price-fixing cartel, which violates antitrust laws. Because both companies are equally responsible for the unlawful agreement, a court would refuse to enforce their illegal contract or provide any relief to CodeCrafters, leaving both parties without legal recourse for their dispute arising from the illegal activity.