An illegal agreement under the

common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...

of contract, is one that the court will not enforce because the purpose of the agreement is to achieve an illegal end. The illegal end must result from performance of the contract itself. The classic example of such an agreement is a contract for murder. The illegality of a contract depends on (1) the law of the country governing the contract, and (2) the law of the place of performance. Different rules will apply depending on the law of the relevant country(ies). However, a contract that requires only legal performance on the part of each party, such as the sale of packs of cards to a known gambler, where

gambling Gambling (also known as betting or gaming) is the wagering of something of value ("the stakes") on a random event with the intent of winning something else of value, where instances of strategy are discounted. Gambling thus requires three el ...

is illegal, will nonetheless be enforceable. A contract directly linked to the

act itself, such as paying off gambling debts (see proximate cause), however, will not meet the legal standards of enforceability. Therefore, an employment contract between a

blackjack Blackjack (formerly Black Jack and Vingt-Un) is a casino banking game. The most widely played casino banking game in the world, it uses decks of 52 cards and descends from a global family of casino banking games known as Twenty-One. This fami ...

dealer and a speakeasy manager, is an example of an illegal agreement and the employee has no valid claim to his anticipated wages if gambling is illegal under that

jurisdiction Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels. Jur ...

. In ''

Bovard v. American Horse Enterprises Bovard may refer to: *Bovard, Butler County, Pennsylvania *Bovard, Westmoreland County, Pennsylvania, an unincorporated community in Westmoreland County *Bovard Field, a stadium in Los Angeles, California People with the name Bovard *Alan Bovard * ...

'' (1988),''Bovard v. American Horse Enterprises''
201 Cal. App. 3d 832, 247 Cal. Rptr. 340
(1988). the California Court of Appeal for the Third District refused to enforce a contract for payment of

promissory note A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the ''maker'' or ''issuer'') promises in writing to pay a determinate sum of ...

s used for the purchase of a company that manufactured drug paraphernalia. Although the items sold were not actually illegal, the court refused to enforce the contract for

public policy Public policy is an institutionalized proposal or a decided set of elements like laws, regulations, guidelines, and actions to solve or address relevant and real-world problems, guided by a conception and often implemented by programs. Public p ...

concerns. In

Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...

, one cited case of lack of enforceability based on illegality is ''Royal Bank of Canada v. Newell'' (1997 NSCA 196), in which a woman forged her husband's signature on 40 cheques, totalling over $58,000. To protect her from prosecution, her husband signed a letter of intent prepared by the bank in which he agreed to assume "all liability and responsibility" for the forged cheques. However, the agreement was

unenforceable An unenforceable contract or transaction is one that is valid but one the court will not enforce. Unenforceable is usually used in contradiction to void (or ''void ab initio'') and voidable. If the parties perform the agreement, it will be valid, ...

, and was struck down by the courts, because of its essential goal, which was to "stifle a criminal prosecution". Because of the contract's illegality, and as a result voided status, the bank was forced to return the payments made by the husband. Contracts in

restraint of trade Restraints of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. It is a precursor of modern competition law. In an old leading case of '' Mitchel v Reynolds'' (1711) Lord S ...

are a variety of illegal contracts and generally will not be enforced unless they are reasonable in the interests of the contracting parties and the public. Contracts in restraint of trade if proved to be reasonable can be enforced. When restraint is placed on an ex-employee, the court will consider the geographical limits, what the employee knows and the extent of the duration. Restraint imposed on a vendor of business must be reasonable and is binding if there is a genuine seal of goodwill. Under common law, contracts to fix prices are legal. ''Sole supplier'' ("solus") agreements are legal if reasonable. Contracts which contravene public policy are void.

References

{{Reflist Contract law

See also

References