FORMATION OF CONTRACTS: VOID AND VOIDABLE CONTRACTS I. Legality of object.—The law may prohibit the doing of certain things, or certain acts may be con trary to public policy. If an agreement has an object which is thus contrary to law or public policy, an en forceable contract cannot result. The contract can not be enforced, damages would not be allowed for non-performance, and what has been paid under the contract may be recovered. Hence if the perform ance of a given contract would consist in doing such forbidden act, or an act contrary to public policy, the law will not exact performance, nor will the parties be entitled to ask the aid of the law. Such contracts are void, in that they are illegal. If the contract then involves some violation of rules of decency, morals or good manners, the law will take notice of the mischiev ous nature of such an agreement, to the extent of re fusing to recognize that any legal right can arise out of it. As was said in a leading case: A thing may be unlawful in the sense that the law will not aid it, and yet that the law will not immediately punish it.' Such agreements are void as being immoral. Then there are agreements which are void as being against public policy: for example, agreements concerning matters touching the good government of the com monwealth and the administration of justice, or concerning matters affecting particular legal duties of individuals whose performance is of public impor tance, or concerning things which are lawful in them selves, but which are such that individual citizens cannot, without general inconvenience, be allowed to set bounds to their freedom of action in connection with them as freely as they may with regard to other things.' An agreement is also void which provides for some act involving the commission of a civil wrong: for example, an agreement of a debtor to defraud his creditor, or an agreement to carry out some fraudu lent scheme and divide the profits. A debtor in diffi culties who makes a compromise with his creditors, at, say, fifty cents on the dollar, cannot secretly agree with one creditor that the latter shall get some prefer ence over other creditors; such an agreement could be upset. This was well laid down in an English case,
as follows: Each creditor consents to lose part of his debt in consid eration that the others do the same, and each creditor may be considered to stipulate with the others for a release from them to the debtor, in consideraion of the release by him. Where any creditor, in fraud of the agreement to accept the composition, stipulates for a preference to himself, his stipulation is altogether void; not only can he take no ad vantage from it, but he is to lose the benefit of the composi tion.' It is a general rule of public policy that persons who are of full age and in the possession of their faculties should be allowed to contract freely. A person may make a foolish bargain, but the courts will not, as a matter of public policy, declare such con tracts -kid, tho of course if the party to the con tract comes within one of the classes we have above considered, for example, minors or insane persons, the court will then interfere. When a contract is set aside as being contrary to public policy, what is meant is that the contract belongs to some class of contract which has long been recognized by the law as unlawful. Lord Halsbury said in a recent case: I do not think that the phrase "public policy" is one which in a court of law explains itself. It does not leave at large to each tribunal to find that a particular contract is against public policy. I deny that any court can invent a new head of public policy. A contract of marriage broker age, the creation of a perpetuity, a contract in restraint of trade, a gaming or wagering contract, or the assisting of the King's enemies, are all undoubtedly unlawful things ; but it is because these things have been either acknowledged or assumed to be by the common law unlawful, and in case a judge or a court have a right to declare that such things are, in his or their view, contrary to public policy.