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When a transaction (such as a contract) is found to be illegal, either in terms of the common law or statute, the effect is not always the same. It depends on the circumstances.
As explained by the previous example, in some cases of statutory illegality, the illegal conduct is made subject to a penalty but is not prohibited, and therefore has no effect on related agreements.
In other cases of statutory illegality, the conduct may be expressly or impliedly prohibited, and associated contracts will not be enforceable - they are treated as legally void. The same result occurs when a transaction is found to be contrary to public policy under the common law.
Refusing to enforce a transaction may have harsh consequences, particularly if one party has already performed, and it is the other party who is responsible for the illegality. To avoid unfairness, the courts may find ways of mitigating the strictest application of the rule, for example (in appropriate cases) by treating as void any clauses in a contract that would be illegal, but enforcing the remainder of the agreement.
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