Transactions collateral to illegal agreements

(iii)False A transaction collateral to an illegal agreement is always tainted by it; the statement confuses illegal agreements with agreements that are merely void. Start with the test in s. 2(g): an agreement is void if the law will not enforce it. Many agreements fail that test without being forbidden, a wager or an agreement too vague to be understood, for instance, and nobody is punished for making them. An illegal agreement fails it too, but for a stronger reason: its object or consideration is forbidden by law, so it is always void, and the court will not help either party even with the agreements that grow out of it.

The difference is clearest in the transactions connected with each. An agreement collateral to an illegal agreement is itself void, whereas one collateral to an agreement that is merely void may be valid. The taint is one of illegality, not mere voidness: lotteries are illegal, and even the transactions collateral to them are tainted with illegality. Example: a loan given knowingly to finance a smuggling deal cannot be recovered, whereas a loan taken to pay off a wagering debt (a wager being void but not illegal) can. The statement would be true only of agreements that are void without being illegal.