The effect of illegality is that the contract is rendered void, no action can be brought on it, and any money paid or goods transferred cannot be recovered. However, the rule is subject to the following exceptions:
- Where both the parties to a contract are not equally guilty, the innocent party may be able to recover any sum paid. For example, where a person is fraudulently induced to enter into an insurance contract in which he has no insurable interest, he will be allowed to recover premiums which he has paid.
- Where the illegal purpose of the contract is not yet carried out, and one of the parties honestly repents entering into it, the court will assist him to recover the money or goods transferred under the contract.. But repentance after the due date of performance is not acceptable by the courts (Bigos v Boustead, 1951).
- Money paid under marriage brokage contract is recoverable, if the marriage has not been performed (Hermann v Charlesworth 1905)
- Goods or money paid in pursuance of an illegal contract may also be recoverable where a statute has been intended to protect a class of persons and the person