Void ab initio and illegal contracts are two legal terms that can cause confusion for many people. While they both refer to contracts that are unenforceable, they have different implications and legal consequences.
Void ab initio refers to a contract that is considered void from the beginning. This means that the contract was never legally valid, to begin with, and therefore cannot be enforced. In other words, it is as if the contract never existed in the eyes of the law. This can occur for a number of reasons, such as when one party lacks legal capacity to enter into a contract or when the terms of the contract are illegal or against public policy.
For example, if a minor enters into a contract, the contract is considered void ab initio since the minor lacks the legal capacity to form a contract. Another example would be if a contract is made for an illegal purpose, such as selling illegal drugs, then that contract would be considered void ab initio.
On the other hand, an illegal contract is one that is valid but unenforceable because it violates a law or is against public policy. This means that the contract was legally formed, but the terms of the contract are not allowed by the law. An illegal contract can be enforced if it is not challenged, but if it is brought to court, then the court will not provide any relief to the parties involved.
For example, if a contract is made to hire a hitman to commit murder, that contract would be illegal since it is against the law. Another example of an illegal contract would be if two companies entered into an agreement to fix prices, which is against antitrust laws.
In conclusion, void ab initio and illegal contracts are two terms that refer to contracts that are unenforceable. Void ab initio contracts are contracts that were never legally valid, to begin with, while illegal contracts are contracts that cannot be enforced because they violate a law or public policy. Understanding the differences between these two legal terms can help individuals avoid entering into unenforceable contracts and protect their legal interests.