What is an example of a legal purpose in contract law?

In contract law, a legal purpose refers to the underlying reason for entering into a contract that adheres to the laws and public policies of a jurisdiction. An agreement for a legitimate service exchange is an example of a legal purpose because it involves a mutual understanding and consent between the parties to engage in lawful activities that promote honesty, fairness, and compliance with the law. Such contracts can be enforceable because they serve a valid and recognized function in society.

Legitimate service exchanges signify that both parties are engaging in actions that are lawful and beneficial, thereby fulfilling the essential criteria for a valid contract. This sets the foundation for enforcing the agreement in a court of law if necessary, as it reflects mutual benefits and ethical dealings.

In contrast, contracts for laundering money or selling illegal drugs inherently involve illegal activities and cannot be enforced in court. A handshake agreement without any specific terms lacks the necessary clarity, consideration, and intent to create a legally binding contract, which is also vital for enforceability.