A contract to do something illegal or to do something legal for an illegal purpose is generally invalid. Illegal businesses are usually obviously so and a business broker may be excused from thinking this is not an issue for them.

However, it is important to understand that illegality is not just a reference to criminal activity. It is a reference to any activity that the law might prohibit. Some of these prohibitions relate to legitimate businesses doing something illegitimate. If entering into such a contract, the contract will be unenforceable.

For example, in Queensland, the Gaming Machine Act 1991 (Qld), gaming machines cannot be sold or obtained without the necessary licence authority. Any contract to do so would be illegal and unenforceable.

As a business broker, you must know or at least have some appreciation of the laws that apply to industries in which you sell businesses.

Joe Kafrouni, Legal Practitioner Director, Kafrouni Lawyers

Disclaimer

The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Business brokers and their clients should always consult their own legal advisors to discuss your particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

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