When Is A Contract Illegal?

There are two kinds of illegality. First is common law illegality and second is statuary illegality. Then there is a further distinction between contracts that are illegal as formed and contracts which are legal as formed but illegal as performed. Let's take the example of a contract to deliver pizza by motorcycle. It is performed by a motor cyclist who exceeded the speed limit. This would contract illegal as to its performance. Another example would be of a contract of carriage of goods by sea.

It is lawful when it is formed but it would be illegal s t performance if he over loaded the goods. Where a statue prohibits certain type of contracts and parties nevertheless make that kind of a contract when the contract would be illegal as to formation. In such a case courts will not enforce a contract which is illegal of any kind .There are several reasons for this to punish the wrongdoers to uphold and preserver the dignity of the English courts. Public policy is another very important reason for not enforcing illegal contracts.