§4. Finally, we laid down that the expediency of legally recognising the validity even of agreements apparently advantageous to both the contracting parties was limited by the condition that the effects which the agreement was designed to produce involved (a) no violation of law, and (b) no cognisable damage to third parties or to the community at large. By the first of these two conditions it is not merely meant that the execution of any promise legally enforced must not involve a violation of law---it would, of course, be absurd that an otherwise illegal act should become not only legally permissible but even legally obligatory, merely because the agent had expressly undertaken to perform it. The more important part of my meaning referred to cases in which the promise which there is a question of enforcing, is not itself illegal, but in which the prospective illegal conduct of the other party to the contract constituted the whole or part of the inducement to make the promise: in such cases to give legal validity to the promise is obviously objectionable, as affording indirect encouragement to the doing of illegal acts. In itself it is quite lawful for me to give a ruffian a £5 note; but if, having promised to give him £5 if he would horsewhip my enemy, I were compelled by law to fulfil the promise, the law would be indirectly serving to increase the inducements to illegal horsewhipping.
The ground for stating separately the second limitation (b) is not quite so easy to see. If, it may be said, there are any acts so mischievous that promises to perform them---and even contracts made in consideration of promises to perform them---ought not to be enforced, how comes it that such acts are not prohibited by law? The answer to this question will perhaps be more easily given when I come to consider the different modes and degrees of governmental interference for the prevention of mischief, and the different drawbacks that attach respectively to these different modes and degrees. I shall there point out that the kind of governmental interference which consists in refusing to interfere---of which the refusal to recognise contracts is one species---is not open to some of the objections that may be urged against interference by direct legal prohibitions and penalties actively enforced by law courts: there may, therefore, be a margin of conduct harmful to the community which may expediently be prevented by the former milder mode of interference, though it would do more harm than good to repress it by the latter more intense method.
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