If the parties do so in spite of everything, the contract is generally null and for the most part. The reason is that Parliament intended to prohibit the nature of the agreement, and that intention takes legal effect by the courts. The fact is that the courts are not in a position to enforce what would otherwise be enforceable rights. For example, if two parties enter into a contract to hire one of them as a blackjack dealer, but the game is illegal in their condition, the contract is void. This is because the contract would require the employee to carry out illegal activities, namely gambling. Thus, it can sometimes be difficult to prove whether a contract is illegal or not. A basic general rule is that if the contract requires one of the parties to do something that is illegal, it will generally be unenforceable. It may be that, despite the illegality, something can be recovered from the situation. However, there is a useful purpose for illegal contracts, and that is when they are used as protection against a violation of contractual rights. This is called the “defence of illegality.” In addition, illegal contracts also prevent recovery of more than monetary damage. Recovery is not permitted for cancellations of contracts (i.e. termination of contract), reimbursement or certain benefits, as well as for certain services. A person involved in an illegal agreement risks losing because his or her actions are not covered by the illegal treaty.
It is therefore important to get advice from a lawyer before signing a contract, and the lawyer can tell you whether the contract is illegal or not. In Canada, a case of non-performance based on illegality is cited: Royal Bank of Canada v. Newell, 147 D.L.R (4.) 268 (N.S.C.A.), in which a woman forged her husband`s signature on 40 cheques worth more than $58,000. To protect them from prosecution, her husband signed a letter of intent from the bank, in which he agreed to assume “all responsibilities and responsibilities” for forged cheques. However, the agreement was unenforceable and was repressed by the courts because of its essential objective of “stifling criminal prosecution”. Due to the illegality of the contract and the cancelled status, the bank was forced to return the husband`s payments. An illegal contract prevents contract claims when a party attempts to enforce an agreement that prohibits the law. Illegality is first and foremost used to defend rights. As noted above, the case depends on whether a contract is considered illegal or not, the purpose of the contract.