You cannot Profit from Your Own Illegality

Remember this adage: You cannot profit from your own illegality.

In a recent case, parties entered into a promissory note for the repayment of gambling debts. Naturally, the promissory note was not repaid and a lawsuit on the note was initiated.  However, the promissory note was illegal as a matter of law and parties cannot ratify an otherwise illegal transaction:

[Florida Statute] Section 849.26 provides that “[a]ll promises, agreements, notes, bills, bonds or other contracts, mortgages or other securities . . . for the repayment of money lent or advanced at the time of a gambling transaction for the purpose of being laid, betted, staked or wagered, are void and of no effect.” “This statute bars enforcement of gambling debts even if the debt was incurred in another state where the gambling was legal.” “A contract which violates a provision of the constitution or a statute is void and illegal, and, will not be enforced in our courts.” Any attempt by the parties to ratify an illegal contract is also futile. 

Taboada v. Duarte, 49 Fla.L.Weekly D1703a (Fla. 3d DCA 2024) (internal citations omitted).

The rationale, here, makes sense. “To prove a breach of contract, a plaintiff must prove that (1) a valid contract existed; (2) a material breach; and (3) damages. Deauville Hotel Mgmt., LLC v. Ward, 219 So. 3d 949, 953 (Fla. 3d DCA 2017). Where, as here, the contract is void and unenforceable under Florida law, a plaintiff can’t meet element one — the existence of a valid contract.”

Duarte, supra, n. 3.

This takes us back to the adage: You cannot profit from your own illegality.

Please contact David Adelstein at [email protected] or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.