Distinctive Analysis between Illegal Contract and Void Contract

The issue to be discussed in this article is basically on; whether there is distinction between a contract being void, and being illegal.

The philosophy that inspired this question aroused from the desire to clarity the perplexed position of the current principle as regard to what are illegal and void contracts.

The term ‘contract’ needs to be examined if at all issues raised are to be answered.

Contract means an agreement between private parties creating mutual obligations enforceable by law. According to Tobi J.C.A., in the case of Orient Bank (Nig).plc V Bilante int’l ltd (1997)8 NWLR (pt.515) 37 at 76. defined contract to be an agreement between two or more parties which creates reciprocal legal obligations to donor not to do particular things.

The basic elements required of agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity and legality.
The term “valid” needs to be emphasized on to definitely conclude the enforceable contract and binding by law, it has been established that (a valid offer and acceptance leads to mutual assent and definitely form a valid agreement). This denote that the otherwise form of agreement tends to be invalid and void which will be more elucidated.

On What Amounts to Illegal Contract?

Any contract, which seeks to circumvent the provisions of a statute is ex-facie illegal and no party to such contract can take benefit from it. A transaction or contract, the making or performance of which is expressly or impliedly prohibited by statute, is illegal and unenforceable. Where a contract made by the parties is expressly forbidden by statute, its illegality is undoubted and no court ought to enforce it or allow itself to be used for the enforcement of alleged obligation arising thereunder, if the illegality is duly brought to the notice of the court is implicated in the illegality as held in the case of ALAO V A.C.B(1998)3 NWLR (pt.542) 339.

Whilst a void contract is said to be one that is not enforceable in court. If the contract is deficient, it includes an agreement to do anything illegal or is without proper leg components.

The term ‘illegal’, when used in relation to contract is a very wide, vague and imprecise one. Thus, it embraces illegal contracts, strictly so-called, and void contracts. It also includes contracts rendered illegal or void by statute and those rendered illegal or void by common law. Due to this lack of clarity in the definition of illegal contracts, it has become virtually impossible to carryout a logical and satisfactory classification of the subject. It is clear that there is no real distinction between the two situations presented above. Surely the law will only refuse to assist a person who bases his cause of action on such an agreement, if it is in fact invalidated by express, or for
that matter, implied,statutory enactment or by rules of common law (Sagay pg 359).

Distinction between Illegal and Void Contract

In short, illegality and voidness, as defined or elucidated above mean practically the same thing, but the issue was showered with LEX blessing from the decision held in the case of CORPORATE IDEAL INS. LTD. V AJAIKUTA STEEL CO. LTD. (2014)7 NWLR (pt. 1405) 165 S.C. that:

“A contract is invalid either by clear statutory enactment or by rules of common law. Where a contract is expressly prohibited by statute and there is sanction pronounced by the enactment such contract is illegal. The test of illegality is prohibition and sanction. On the other hand, a void contract is not expressly prohibited and its formation is never followed by sanction. And the party thereto have no rights whatsoever. see also SODIPO V. LEMNINKAINEN OY (No. 2) (1986) 1 NWLR (pt. 15) 220 .

Musa is a LLB II student of Bayero University, Kano.


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