What Is an Illegal Agreement State the Effect of Illegality

When two parties agree to enter into a contract or business arrangement, it is expected that the agreement will be legal and enforceable. However, there are situations where agreements are considered illegal, thus rendering them unenforceable. An illegal agreement is one that violates the law, public policy, or morals. In this article, we will discuss what an illegal agreement is and the effects of illegality.

What is an illegal agreement?

An illegal agreement is a contract or arrangement that violates the law, public policy, or morals. Such agreements are unenforceable since they are considered to be against the law. Examples of illegal agreements include those made with the intention of committing a crime, such as drug trafficking, money laundering, or bribery.

The effects of illegality

1. Void agreement

An illegal agreement is void as it is against the law. It means that it has no legal effect, and the parties cannot enforce it in court. If one of the parties to the agreement goes to court to enforce it, the court will not recognize it and will not enforce it.

2. Criminal liability

The parties to an illegal agreement may face criminal charges and prosecution. For example, if two people enter into an agreement to carry out drug trafficking, they could be charged with drug trafficking, and each could face criminal prosecution.

3. Civil liability

Even though the agreement is unenforceable, the parties may still be liable for damages resulting from the illegal agreement. For example, if two people agree to carry out an illegal business deal and one of them suffers losses, they can sue the other party for damages.

4. Loss of reputation

Entering into an illegal agreement can damage a person`s reputation and harm their business interests. It can lead to a loss of trust and reputation, which can have long-term consequences.

5. Financial loss

If an illegal agreement is void, any money paid or received under the agreement may need to be returned. For example, if someone pays for illegal goods or services, they may need to repay the money.


In conclusion, an illegal agreement is one that violates the law, public policy, or morals. It is not enforceable, and both parties may face criminal and civil liability. In addition, they may also experience loss of reputation and financial loss. Therefore, it is important to ensure that any agreement entered into is legal, valid and enforceable. As a professional, it is essential to understand the impact of illegality on agreements to ensure that any content produced is accurate and informative.