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Patel vs Mirza Case Summary

Patel vs Mirza (2016) UKSC 42

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The plaintiff, Mr. Patel paid 620,000 euros to Mr. Mirza, the defendant, who had agreed to place a bet on the shares of Royal Bank of Scotland. This agreement was reached between the parties because Mr. Mirza through his contacts had some exclusive insider information about a crucial government announcement that would affect the status of the bank in the market. The insider information failed to fulfill its expectations and Mr. Mirza was unable to return the stipulated amount to Mr. Patel. Hence, the plaintiff filed a suit against Mr. Mirza claiming that the defendant infringed the terms of the contract.

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The plaintiff claimed that he did not receive the promised amount from the other party to the contract as Mr. Mirza failed to return the funds which he promised in the agreement.

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  • The application of insider trading.
  • Criminal Justice Act, 1993


The Supreme Court bench of the United Kingdom held unanimously that the plaintiff entitled to recover his funds from Mr. Mirza. The bench also dismissed the test of reliance which was laid down in the case of Tinsley vs. Milligan [1994] 1 AC 340, which stated that the aggrieved party cannot claim any amount nor can redeem any loss from an agreement which is formed on the principle of illegality.

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The court observed that if it dismisses the claims of the plaintiff then the other party might be the one benefitting from the deal. The bench passed its judgment so as to no party or parties may get any benefits from an illegal deal or agreement. As in this case if the claims of Mr. Patel were not entertained by the Supreme Court then the other party would have been on the profit side.

The doctrine of illegality laid down in the case of Tinsley vs. Milligan [1994] 1 AC 340 was struck down as the bench was of the opinion that the test of illegality failed to deliver justice to the aggrieved party because in the aforementioned case the plaintiff was being deprived of justice while this test.

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Current Day Significance

The test of reliance laid down in the case of Patel vs. Mirza was followed in the case of Stoffel and Co. vs. Grondona [2020] UKSC 42, where Ms. Grondona was involved in fraud regarding the sale of a property as she allegedly made dishonest misrepresentation in the application form of the mortgaged property.


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