The law may invalidate a contract that it considers has an unlawful or improper purpose. This principle is known as ex turpi causa non oritur actio (that is, a court will not allow a party to base a cause of action upon an illegal act). The law may declare a contract illegal and unenforceable. Alternatively, the law may declare a contract void as against public policy (that is, against the best interests of the general community). There are four possible outcomes:
(a) the contract is entirely void; (b) a term of the contract is void (that is, only the term is void – the
whole contract is void only if the term is not severable); (c) the contract is void only in certain circumstances (for example, as
against the Australian Taxation Office); (d) the contract is not void but is unenforceable, either in whole or in
part (subject to the rights of an innocent third party).
