The parties will find themselves in the situation where they would have entered if they had never concluded the illegal agreement. From a legal point of view, this is the position they should always have been in because of the illegality. It does not enter into the same meaning as contemplation and is not used in the same sense. According to this connotation, if a contract has a legitimate and real consideration, it will not prevent the contract from becoming illegal for the object, that is, the object of the contract is illegal and contrary to public policy. To establish the illegality of a contract, the basic rule, usually followed, is to ask the question: „Are the parties doing anything against the law by interfering in the treaty?“ If this question is answered in the affirmative, the treaty is illegal and unenforceable. Section 23 of the Indian Treaty contains various parts that determine the illegality of a contract. The general consequence of illegality is that courts do not give any support to a party to the trial by giving recourse to a party to profit from illegal conduct. The result is usually that the treaty is illegal and one of the factors – among many others – is whether illegality can be removed from the treaty altogether. There is still general confusion as to the meaning of the term „prohibited by law“, which means „void“.
However, these two concepts have different meanings that do not make them interchangeable in the legal context. What is considered „unspoken“ does not necessarily have to be „prohibited by law“. This argument was accepted by the General Court in Gherulal Parakh v. Mahadeodavo the Supreme Court decided that the intention of the provisions of section 23 was to have limited meaning. This has been accelerated in order to avoid overlaps between two concepts. The restoration of the parties` position prior to the unlawful agreement satisfied the legal considerations which, in that case, underpinned the doctrine of illegality. The more serious or deliberate the illegality, the harsher the likely approach a court is to deny recourse. Criminal courts are there to punish criminal behaviour in the name of society: fines and penalties are imposed in the name of society. A specific standard must be met for a contract to be compromised by the illegality of the common law.
The difference between invalid and illegal contracts is subtle, but important. In 1872, the Indian Contract Act defined the boundary between invalid and illegal agreements. It is very likely that an agreement is not allowed by law and an illegal agreement is strictly not allowed by law. Both parties can be disciplined to join an illegal agreement. Since an inconclusive agreement has no effect from the outset, it has no legal consequences. No aspect of an illegal agreement is ever considered legal. In employment contracts, knowledge of the facts and the worker`s participation in illegality are minimum conditions for the worker to be deprived of his or her labour rights. The possibilities of effects of an illegal contract are now based on an essentially well-founded value judgment, based on the particular circumstances of the illegality, the right infringed and the other factors enabling the outcome to be assessed. Legal illegality can occur in at least 3 ways. For example, a law could: No right is durable for a contract that requires parties to harm a person or a person`s property.
Since such conditions are punishable by criminal penalties, the courts cannot enforce such contracts, so that they are, as a whole, null and void. It is annulled in the sense that the Treaty is deprived of any legal effect. This is not to say that policyholders would necessarily be prevented from recovering premiums paid for insurance coverage. However, a countervailable contract shall commence as a contract in force.. . . .
