A contract is considered illegal if either the consideration given for the contract is

illegal or the object of the contract is illegal. For example:

Tom promises to give Jerry five grams of cocaine if Jerry promises to drive Tom to
Manhattan on Saturday. This is an illegal contract because the consideration given
for the contract is illegal.

Tom promises to give Jerry $5,000 if Jerry robs a bank on Saturday. This is an
illegal contract because the object of the contract is illegal.

Unlike contracts entered into by people who lack the legal capacity to enter
contracts, which are merely voidable by those people, illegal contracts are void.
Thus, neither party can enforce such contracts.

A contract is illegal if it involves doing something that is a criminal act or a

civil wrong, or against the public good. For example, it is an offence to sell
a firearm to a person not licensed to hold one, so a contract to sell a
firearm in these circumstances is illegal. A contract whose purpose is to get
the party to it to break another legally binding contract that the party has
made already is also illegal. Moreover, a contract which otherwise would be
legal is illegal if its subject matter is to be used for an unlawful purpose. So,
if a firearm dealer were to agree to sell a firearm to a person licensed to
hold a firearm knowing that the buyer intends to use it to kill someone, that
contract would be illegal.

Courts will not enforce an illegal contract. Money paid or property

transferred under an illegal contract cannot normally be recovered. There
are exceptions however. For example, where a contract is made illegal by
a statute passed for the protection of a class of people, a member of that
class can get back money paid or property transferred by her or him under
the contract. So a tenant would be able to recover money paid to a landlord
which the landlord is prohibited by an Act to collect.

The law about illegal contracts is very complex. If there is any doubt about the
legality of a contract, seek legal advice.

Illegal contract is a promise that is prohibited due to its very nature. Such
contracts are prohibited since the performance, formation, or object of the
agreement is against the law. Technically, an illegal contract is not a
contract at all and hence the phrase is a misnomer. An illegal contract is
exceptionally difficult to define. However, a contract can well be illegal
without contravening the criminal law. There are certain activities which the
law does not actually prohibit, but at the same time need to be discouraged
with respect to the public interest, such as prostitution. While a void
contract is not necessarily illegal, an illegal contract is often void.

An illegal contract is unenforceable under the law for the simple reason that it is
illegal. Most often, an illegal contract is deemed illegal because the contract is
ultimately designed to perform some illegal function or purpose. For example, a
“contract” under which one individual pays another to commit murder would be
considered an illegal contract and would be entirely unenforceable.

An illegal contract thus must clearly and definitively be deemed illegal from one of
the terms built into the contract in order to be considered unenforceable. A
contract which might potentially lead to illegal action, but which does not
immediately involve any such illegal action would ultimately be considered a legal
contract.

For example, if a drug user were to purchase items which might potentially be
used to create something for imbibing drugs, that contract might not be illegal, as
the purchase of those items in and of themselves would still be considered legal
and enforceable. If an individual made a contract to assist the drug user in setting
up the device, however, that would likely be considered an illegal contract.

One of the most common types of illegal contracts are contracts which are in
restraint of trade. This means that contracts which in some way prevent or
control the manner in which an individual might perform trading would ultimately
be deemed illegal and unenforceable, as only laws can restrict trading practices,
not contracts. There may be some exceptions to this in certain instances, but for
the most part, any such contracts would be deemed illegal.