Explanation:

- Option 1: Contract is voidable

- A voidable contract is initially valid but can be invalidated by one party. Typically applies if there's fraud, misrepresentation, or undue influence.

- Option 2: Contract is legal

- The contract is valid and enforceable in all respects and does not violate any laws or public policy.

- Option 3: Contract is void

- A void contract has no legal effect from the beginning as it deals with illegal subject matter, making it unenforceable.

- This is the correct option.

- Option 4: No effect

- This would imply the transfer has no consequences, which is typically not the case in illegal transfers.