Page 12 - 01. Indian Contract Act, 1872

Legal Agreement - An agreement which can be enforced legally

Illegal Agreement
(i) It goes beyond the basic public policy, thus are not enforceable by law
(ii) It is not only void as between immediate parties but the collateral transactions
also become illegal
 Its consequence
(i) entirely void
(ii) No action can be brought by or against any party
(iii) Money paid or property transferred under it cannot be recovered
(iv) If its two parts legal and illegal are separable, only legal part can be
enforced by the court
(v) Agreement collateral to it are also illegal

Void Agreement

 Agreements not enforceable by law are void
 They are not always illegal and its collateral transactions are legal
 It cannot give rise to any legal consequence
 It is void – ab – inito (i.e. void from very beginning)
 Eg minor‟s contract

Difference between void and illegal agreement

Void agreement Illegal agreement
(i) All void agreements are not illegal (i) All illegal agreements are void
(ii) They are not punishable (ii) They may be punishable with
fine, imprisonment or both
(iii) collateral agreements are legal (iii) collateral agreements are
void
(iv) Valid contracts sometimes (iv) they are void from very
subsequently b becomes void e.g. beginning
agreement entered with a minor e.g agreement to murder a
person

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