Circuit Judge Richard A. Siebel agreed with Jordan's attorney, Frederick J. Sperling, that such an agreement with Karla Knafel would be unenforceable legally.
Knafel contends NBA referee Eddie Rush introduced the two over the phone while she was singing at a hotel in Indianapolis. Rush and Jordan were in Indianapolis for a Bulls game against the Pacers.
Sperling argued that paying the sum to Knafel in exchange for her silence about an affair she had with Jordan would amount to paying extortion money.
"Because the hush money provision infects the entire agreement, the court finds that the entire agreement between Jordan and Knafel is void and unenforceable as a matter of law," Siebel said.
Knafel's attorney, Michael Hannafan, said his client and Jordan had a sexual relationship from 1989-91 in Chicago, Indianapolis and Phoenix. Knafel discovered she was pregnant shortly after being with Jordan in November 1990, Hannafan said.
At that time, she believed the child was Jordan's, he said.
Jordan, a former star with the Chicago Bulls and Washington Wizards, then offered her $5 million to buy her silence about their relationship and about the child she thought was his, Hannafan said.
"It was Jordan who initially offered to pay her $5 million in the spring of 1991 for her agreement not to file a public paternity proceeding and for keeping their sexual relationship publicly confidential," Hannafan said last November in filing a breach of contract lawsuit against Jordan.
Blood and DNA tests performed after the child's birth in July 1991 determined Jordan was not the father.
Jordan contended in court documents that once tests determined that he did not father the child, Knafel and her attorneys agreed to a $250,000 payment. He denied ever agreeing to pay the $5 million.