Q.Which of the following best distinguishes an illegal agreement from an ordinary void agreement?
(A) An illegal agreement is forbidden by law and taints even its collateral transactions, while a void agreement need not be forbidden by law and its collateral transactions remain valid
(B) There is no real legal difference between the two terms
(C) A void agreement is always punishable, while an illegal agreement never is
(D) An illegal agreement becomes enforceable once it is registered

An illegal agreement is a narrower, more serious category than a merely void one — it also spreads its taint to connected transactions.

Every illegal agreement is void, but not every void agreement is illegal. An illegal agreement is one whose object or consideration is forbidden by law; because the law actively disapproves of it, it also taints any COLLATERAL transaction connected to it (e.g. money lent specifically to fund the illegal act cannot be recovered). A merely void agreement (e.g. a wagering agreement) is simply unenforceable in itself, but a separate, collateral transaction connected to it remains perfectly valid.

Option-by-option analysis:

• (A) Correct — this captures both the 'forbidden by law' distinction and its practical consequence for collateral transactions. …