What is an illegal contract?

An illegal contract refers to an agreement that involves activities or terms that are prohibited by law. Such contracts lack legal validity and cannot be enforced in a court of law. For instance, if a contract requires one party to engage in illegal activities, such as drug trafficking or extortion, this contract is inherently illegal and thus void ab initio, meaning it is treated as if it never had any legal effect.

In contrast, other options reflect situations that do not constitute an illegal contract. A contract that is no longer relevant may simply pertain to outdated obligations, while a contract that can be voided at any time suggests conditions that allow for nullification but does not necessarily involve illegality. Similarly, a contract that only one party can enforce could imply a situation where terms are legally acceptable but perhaps unfair, rather than inherently illegal. Thus, the defining characteristic of illegal contracts lies in their violation of law, making them unenforceable.