The freedom of Contract is determined by the considerations of public policy and legality of the terms of the contract. At common law the judiciary had created various categories of public policy under the areas of Illegal Contracts and Void Contracts. Illegal Contracts refer to some degree of moral wrong and contracts to commit crimes or to defraud the revenue. Some Contracts are interpreted as void because if they are enforced by the courts there would be destructive consequences in the society, such as Contracts in restraint of trade and Contracts prejudicial to marriage. Illegal contracts include contracts to commit crimes or civil wrongs, contracts involving sexual immorality, contracts prejudicial to good foreign relations, contracts prejudicial to the administration of justice, contracts tending to corruption in public life, contracts to defraud the Revenue. The outcome of an illegal contract is determined by the fact whether the contract was lawful or unlawful on face its face. The contracts which are inappropriate or unwise rather than unprincipled are regarded as against public policy. When a contract is rendered void by the judiciary for containing terms which are against public policy, the lawful promises which do not offend public policy are set-apart and enforced and hence such a contract is not wholly invalid.
