what is a illegal (prohibited) us government contract type Solution An illegal contract is a contract that was made for an illegal purpose and, consequently, violates the law. Contracts are illegal if the performance or formation of the agreement will cause the parties to engage in activity that is illegal. The illegality must relate directly to the subject matter creation of the contract and not some intervening circumstance. For example : (1) Employers should not ask whether or not a job applicant is a United States citizen before making an offer of employment. The Immigration Reform and Control Act of 12986 (IRCA) makes it illegal for employers to discriminate with respect to hiring, firing, or recruitment or referral for a fee, based on an individual\'s citizenship or immigration status .