key term - Legality

Definition

Legality refers to the requirement that a contract must be for a lawful purpose and not violate any statutes or public policy. This means that the content and purpose of the agreement must align with existing laws, making it enforceable in a court of law. If a contract involves illegal activities or violates established laws, it is considered void and unenforceable, which has implications across various aspects of contractual agreements.

5 Must Know Facts For Your Next Test

1. Contracts for illegal activities, such as drug trafficking or gambling where prohibited, are void and cannot be enforced by law.
2. Even if parties enter into an agreement willingly, if the purpose is illegal, the contract will be deemed unenforceable.
3. Legality serves as one of the essential elements of a valid contract, alongside offer, acceptance, consideration, and capacity.
4. Certain contracts may be legal but still violate public policy, such as agreements that restrain trade or promote unfair competition.
5. Courts will not provide remedies for parties involved in illegal contracts, leaving them without recourse if one party fails to perform.

Review Questions

• How does the concept of legality ensure that contracts serve lawful purposes and protect societal interests?
  • The concept of legality ensures that contracts are aligned with established laws and public policy, which serves to protect societal interests. By requiring contracts to be for lawful purposes, the legal system aims to prevent exploitation and harm resulting from illegal agreements. This not only maintains order within society but also reinforces trust in contractual relations by ensuring that parties are held accountable for their commitments within a legal framework.
• Discuss how contracts that violate public policy might still be legal yet remain unenforceable in court.
  • Contracts that violate public policy may technically not involve illegal actions but can still be considered unenforceable due to their harmful effects on society. For example, a contract that restricts competition may not directly break the law but can undermine market fairness. Courts can deem such agreements unenforceable to uphold ethical standards and promote a healthy economic environment, despite their surface legality.
• Evaluate the implications of entering into a void contract on the parties involved and how this affects future contractual relationships.
  • Entering into a void contract has significant implications for the parties involved, as they cannot seek legal recourse if one party fails to fulfill their obligations. This lack of enforceability can lead to financial loss and damaged trust between parties. Additionally, engaging in void contracts may affect future contractual relationships by raising concerns about a party's reliability and ethical standing, leading others to hesitate before entering agreements with them again.

Related terms

Void Contract: A void contract is an agreement that lacks legal force or effect from the moment it is created, often because it involves illegal actions or violates public policy.

Public Policy:

Public policy refers to the principles and standards that govern what is considered acceptable conduct in society and can affect the legality of contracts.

Unenforceable Contract: An unenforceable contract is a valid agreement that cannot be enforced in a court due to some legal reason, such as illegality or lack of required elements.