A “void” contract must been distinguished from one which is “illegal” (in the sense that it is either prohibited by law otherwise against the policy of law; sec.23 seq.). Both contracts are unenforceable at law. The difference between the two, however, becomes clear when the legal effect of such contracts on collateral transactions is considered. The rule of law is that no contract which is designed to assist or promote and illegal transaction will be enforced at law. In other words, when a contract is illegal, collateral transactions depending thereon are also void.
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Thus in Alexander vs. Rayson (i) two agreements of lease were affected of the same property but with different rentals, with a view to deceive the local authority as to the true rate able value of premises. A dispute having arisen between the lessor and the lessee, the court held that, looking at the fraudulent object of the whole transaction, the court will not assist the lesser in enforcing either the first or the second agreement against the lessee. As distinguished from this, is the case of a “wagering” agreement. Such an agreement is void (sec. 30 seq.) but not illegal. Collateral transaction arising from a wagering transaction, therefore are not void.
Thus there is nothing illegal in paying or receiving payment of a lost bet. Similarly, a broker can successfully maintain a suit against the principal for recovering his commission in respect of a wagering contract.