What are the Effects of Illegal Agreement?

Any agreements that are prohibited by Indian law are deemed to be an illegal agreement in Indian contract act. The agreement will be void if any of the two circumstances—illegal object or illegal consideration—occurs. An agreement is illegal even if its terms force the parties to commit a crime.

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What are the effect of illegal agreement?

If an agreement is deemed illegal, the following things will happen:

• The contract is null and void and is not enforceable.

• In the event of a breach, either party to the agreement may be held responsible for damages.

• The fact that there are a few exceptions to the general rule that illegal agreements are void should be noted. An illegal arrangement, for instance, might be upheld if it's part of a larger, otherwise lawful contract.

• It's crucial to carefully analyse the terms of any agreement you're thinking about before signing to be sure there are no unenforceable provisions.

• It is best to speak with a lawyer if you are concerned about the consequences of illegal agreement.

• You should get legal counsel if you are a party to an illegal arrangement so that you are aware of your rights and obligations.

By heeding these recommendations, you can help shield yourself from the effect of illegal agreement.

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Hi Buddy,

 I am practising law. Are you confused about what are the effects of illegal agreement? I would like to help you out with this. However, I feel before understanding the effects, let us focus on the meaning of an illegal agreement.

Illegal Agreements are defined as those agreements that violate current laws in a certain domain and are of a criminal character in their most basic form. Illegal agreements include those that are morally reprehensible and contrary to public policy. 

Another idea of 'Void' agreements exists under the Indian Contract Act. In this arena, there is a prevalent misunderstanding that the notions of Void and Illegal agreements are interchangeable. This is not the case, however. In terms of nature and even consequence, there are significant disparities between the two.

A void agreement, in contrast to an illegal agreement, can be characterised as one that is not legally binding. Such agreements are unenforceable in the eyes of the law since they do not bind the parties to any rights or obligations. 

A void agreement is not considered legitimate or effective in a transaction. Agreements can be void ab initio, meaning they are void from the start, or they can become void later after losing their legal enforceability due to an act performed during the performance period.

Furthermore, Void agreements have a broader reach and ambit than illegal agreements. Not all invalid agreements are illegal; nonetheless, all illegal agreements are null and void from the start. 

In the eyes of the law, void agreements are not punished. Entering into void agreements does not make the parties legally accountable. Illegal agreements, on the other hand, are controlled by the Indian Penal Code, and parties to such agreements are criminally accountable for their acts throughout the performance of such agreements.

I hope this answer would help you with insights into what is an illegal agreement and what are the effects of illegal agreement.

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