What distinguishes an illegal contract from a void contract?

The distinction between an illegal contract and a void contract primarily hinges on their legal validity. A void contract is considered to have no legal effect from the very beginning; it is as if the contract never existed. This can occur for several reasons, such as the inability of one or both parties to enter into a contract (e.g., minors or mentally incapacitated individuals) or if the subject matter of the contract is illegal.

In contrast, illegal contracts involve agreements that are forbidden by law. While these contracts are not enforceable, they are not void from inception; instead, they become unenforceable because they engage in unlawful activities or go against public policy. This distinction means that while void contracts never obtain validity, illegal contracts may initially appear valid but are rendered unenforceable when called into question.

The other options relate to various incorrect aspects of contracts' statuses. For instance, illegal contracts are not enforceable under any circumstances, nor do they necessarily involve fraud, and void contracts do not cancel automatically but are inherently invalid at the moment of their formation.