Illegal Agreements and Collateral Agreements:

Illegal agreements refer to contracts that are prohibited by law or against public policy. These agreements are considered void, which means they have no legal effect. However, it is important to understand the concept of collateral agreements in relation to illegal agreements.

Collateral Agreements:
Collateral agreements are separate agreements that are made in connection with the main agreement. These agreements are usually intended to support or supplement the main agreement, addressing additional terms or obligations. They are often made between the same parties involved in the main agreement.

Validity of Collateral Agreements in Case of Illegal Agreements:
In the case of illegal agreements, collateral agreements are also considered void. This means that they have no legal effect and cannot be enforced by the parties involved. The reason for this is that collateral agreements are closely connected to the main agreement, and if the main agreement is illegal, it follows that any collateral agreements associated with it would also be illegal.

Example:
Let's consider a hypothetical example to illustrate this concept. Suppose Party A and Party B enter into an illegal agreement to engage in illegal gambling activities. As part of this agreement, they also enter into a collateral agreement to divide the profits from the illegal gambling activities. Since the main agreement (illegal gambling) is void, the collateral agreement (profit division) would also be void.

Legal Implications:
If a collateral agreement is found to be void due to its connection to an illegal agreement, the parties involved cannot rely on it in any legal proceedings. The courts will not enforce or recognize the rights or obligations arising from the collateral agreement.

Conclusion:
In summary, collateral agreements are considered void in case of illegal agreements. They have no legal effect and cannot be enforced by the parties involved. It is important to ensure that any agreements made are in compliance with the law to avoid the consequences of illegality.

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