1. Illegality of a transaction may be due to:
a) Statute.
b) The common law:
aa) Contracts to commit crimes.
bb) Contracts contrary to public policy.
cc) Contracts which offend the accepted rules of morality.

2. Effects of illegality depend upon the nature of the unlawful element:
a) Some things are so clearly 'wrong' that the courts will refuse to enforce contracts that have the barest connection with them: the claim of a smuggler against his insurers if the property is lost; the hiring-out of a brougham to a prosti tute: Pearce v. Brooks 1866
b) Some things are not clearly wrong, neither prohibited: wagers etc. As to wagers, the Financial Services Act 1986 made betting on stock market movements enforceable, thus: City Index Ltd. v. Leslie 1992
c) Contracts contrary to public policy: there are certain restrictions which the courts place upon the right to make contracts which they believe to be contrary to the public interest. Examples: an agreement made by a married person to marry a third party in contemplation of the termination of the marriage by death or dissolution is, if the facts be known to the third party, invalid. Contracts with an enemy at wartime. Agreements to stifle prosecutions. Agreement that a public honour for another person will be obtained in return for a gift to charity.

3. Especially: Contracts in restraint of trade = agreements which inhibit unrestricted enterprise by restraining economic competition. This has its counterpart in copyright and patent law.
a) Prima facia voidness: If the validity of a contract resticting free competition is challenged in court, the assumption will arise that they are void.
b) Such an agreement will be upheld if it is no more than a necessary and reasonable protection of the interest of that person who seeks to enforce it.
c) However, if the other party can show that it is yet contrary to public policy, it will be held void.

4. Contracts restraining trade in detail
a) Examples of restraints:
- tied public houses - contracts only with one brewery
- petrol stations ('solus agreements')
- the buyer of a business exacting from the seller a convenant not to undermine his new business by setting up in opposition ('goodwill' sold)
- employee leaving and agreeing to keep things secret and not to open his own shop
b) Reasonableness
aa) Legitimate interest of protecting one' interests by enforcing the convenant.
Vancouver Malt and Sake Brewing Co. Ltd. v. Vancouver Breweries Ltd. 1934
bb) Duration of time; i.e. five years in the case of a service station and its suppliers:
Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd. 1968
cc) Extent of the area within which the restraint is to operate, range of business:
Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd. 1894
c) Public policy: this must necessarily be one other than the public interest in freedom of enterprise because that issue must have already been decided in the covenantee's favour (the covenant being a reasonable one). Thus, the onus of proving that a covenant is contrary to public policy is a heavy one. Where there is a general public interest in certain services, that need not be so in respect of those services rendered by a particular individual:
Kerr v. Morris 1987
d) Finally, a covenant may always be held to be void on the ground that it is oppressive or unconscionable.
e) Note that article 85 of the EC Treaty must be observed: this renders void 'agreements .. which have as their object or effect the prevention, restriction or disruption of competition within the common market' (unless, of course, especially exempted by Karel).
f) Where a restraint seriously limits freedom of choice, freedom of action, or personal liberty it can seldom be upheld:
Greig v. Insole 1978; distinct: Denny's Trustee v. Denny and Watt 1919
g) Sometimes, these contracts are not held void altogether; rather will the court 'sever', i.e. cut out the invalid part and enforce the rest. Or, they might alter the covenant, i.e. ease restraint.