Unlawful Agreements:

An unlawful agreement is a contract or arrangement that goes against the law, public policy, or ethical principles. This makes it void, meaning it's legally invalid from the start and cannot be enforced in court. Unlike illegal agreements, which involve criminal activities, unlawful agreements typically involve actions that are prohibited by law but not considered crimes.

For instance, a contract that restricts trade or employment unfairly is unlawful. Such agreements can harm competition and economic freedom by limiting an individual's ability to work or conduct business beyond what's legally acceptable. Another example is a contract made for the sale of goods during a government-imposed embargo. Agreement contrary to public policy or morality and agreement in violation of intellectual property rights are also suitable examples of unlawful agreements. While the transaction itself may not be criminal, it violates public policy and legal provisions, making the agreement unlawful.

The case of Pearce v. Brooks (1866) highlights the concept of unlawful agreements. The court declared a contract between a prostitute and her client void because it was deemed immoral. Similarly, agreements that try to bypass legal protections for workers or consumers, like labour laws or consumer rights, are unlawful. For example, an employment contract that violates minimum wage laws or safety regulations would be considered unlawful.

In conclusion, unlawful agreements are inherently invalid due to their conflict with legal norms and public policy. This invalidity prevents their enforcement and any associated legal claims.

Illegal Agreement:

An illegal agreement is a contract or arrangement that violates the law, rendering it void and unenforceable from the start. These agreements involve actions explicitly prohibited by legislation, often encompassing criminal offenses. Consequently, those involved in such agreements face both civil and criminal penalties.

The illegality of these agreements means they have no legal standing and cannot be upheld in a court of law. Parties cannot seek legal recourse for enforcement or damages related to the agreement. Instead, they may face prosecution and legal consequences for their participation.

Examples of illegal agreements abound, such as a contract for the sale of illegal drugs such as cocaine or heroin, an agreement for illicit human trafficking across borders contravening immigration laws and an agreement to launder and conceal funds acquired through illicit activities. This agreement involves the exchange of substances prohibited by drug control laws, making it inherently unlawful and subjecting the parties to criminal prosecution. Similarly, an agreement to commit a crime, like a contract for a hitman to carry out a murder, is void and carries serious criminal charges, including conspiracy to commit murder.

The 'Highwayman's Case' (Everet v. Williams, 1725), exemplifies the consequences of illegal agreements. Two highway robbers, having made an agreement to share their robbery spoils, found themselves in dispute. When one robber sued the other, the court refused to entertain the case, declaring the agreement illegal and void due to its foundation in criminal activity. This case highlights the principle that agreements built on illegal actions have no legal standing.

Differences:

Unlawful agreements, while being void and unenforceable like illegal agreements, differ in their nature and legal consequences. Unlawful agreements contravene public policy, societal values, or legal regulations, but may not entail criminal offenses. These agreements are void from their inception and cannot be enforced by either party in court. Civil remedies primarily apply to unlawful agreements, barring both parties from seeking legal recourse or damages for breaches. Contracts that unduly restrict trade or employment, violating public policy, are examples of unlawful agreements.

Illegal agreements, unlike unlawful agreements, involve actions that are expressly prohibited by law, constituting criminal offenses. Illegal agreements are not merely void but also subject parties to criminal prosecution, including fines and incarceration. A contract for the sale of illicit substances, for instance, would be deemed illegal. Thus, while both unlawful and illegal agreements are unenforceable, the former violates legal provisions without criminal implications, while the latter entails criminal activity and severe legal consequences.

An unlawful agreement, while not legally binding, only affects the parties directly involved in the agreement. Subsequent parties or those entering agreements as a result of the unlawful agreement are not bound. Recovery of money paid under such an agreement is possible, depending on the nature of the agreement and the specific circumstances. Examples of unlawful agreements include those in restraint of trade, in restraint of legal proceedings, or involving trading with an enemy.

An illegal agreement is also void and unenforceable like unlawful agreement. This type of agreement impacts not only the immediate parties but also any collateral transactions related to the illegal agreement, rendering them illegal as well. Recovery of money paid under an illegal agreement is not possible. Illegal agreements are generally more serious in nature and often involve criminal activity. Examples include agreements to deceive creditors, defraud revenue, commit offenses, or engage in immoral activities.

While every illegal agreement is unlawful, the reverse is not always true. There is a fine line between unlawful and illegal agreements, requiring careful consideration when making a distinction.

Written By: Md.Imran Wahab, IPS, IGP, Provisioning, West Bengal
Email: [email protected], Ph no: 9836576565