What is Illegal Contract?
A contract that was made for an illegal purpose and, consequently, violates the law. Contracts are illegal if the performance or formation of the agreement will cause the parties to engage in activity that is illegal.
Examples and Case Studies
Real-Life Example
Consider a situation where two parties, Tom and Jerry, enter into a contract to sell illegal drugs. Because the subject matter of the contract is illegal, the contract itself is void and unenforceable. Neither party can seek legal enforcement of the contract terms in court.
Case Study: State v. Smith
In State v. Smith, Smith entered into an agreement with another party to smuggle contraband into the country. When a dispute arose, Smith attempted to enforce the contract. The court ruled that the contract was illegal and void because it required illegal conduct, thus rendering it unenforceable.
Case Study: Johnson v. Green
In Johnson v. Green, Johnson and Green formed a contract to operate a business that violated local zoning laws. When Green refused to proceed with the contract, Johnson sued for breach of contract. The court found the contract to be illegal due to its purpose, which involved illegal activity, and therefore ruled that the contract could not be enforced.
Legal Requirements
| Requirement | Description |
|---|---|
| Illegal Purpose | The contract must involve an agreement to engage in illegal activities. |
| Violation of Law | The performance or formation of the contract must violate the law. |
| Unenforceability | Contracts with illegal purposes are void and unenforceable in a court of law. |
Common Issues and Disputes
- Determining whether the purpose of the contract is illegal.
- Assessing the legality of the activities required to perform the contract.
- Resolving disputes where one party seeks to enforce an illegal contract.
- Understanding the implications of an illegal contract on related legal agreements.
Key Points
- An illegal contract involves an agreement to engage in activities that violate the law.
- Such contracts are void and cannot be enforced by the courts.
- Parties cannot seek legal remedies for breach of an illegal contract.
- Courts will refuse to enforce any contract that requires illegal conduct for its performance or formation.
Further Reading
For more detailed information, see our related Contracts terms:
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