Which term describes an illegal transaction in which both parties are equally at fault?

• A. In pari delicto agreement
• B. Accord and satisfaction
• C. Usury
• D. Insurable interest

Answer: (A)

In pari delicto describes an illegal transaction in which both parties are equally at fault. The phrase means “in equal fault,” and the rule is that courts will not aid either party when both knowingly participate in illegal activity. Because neither side should benefit from illegal conduct, the contract is not enforceable, and relief is denied to both parties.

That’s why this term fits best. The other concepts refer to different ideas: accord and satisfaction is about settling a dispute by offering performance, usury concerns charging unlawful interest, and insurable interest is about having a stake in the insured item or life. None of those capture the mutual illegality and equal fault described by in pari delicto.