Imaginary transaction and its signs

A fictitious transaction is one that is made for a species, without any legal consequences. From a legal point of view, it is considered insignificant from the moment of conclusion.

A fictitious transaction may seem to be flawless, not to have defects in content and subject composition. However, at the same time, the parties make an attempt to deceive others, creating the impression that they are with each other in certain business relations, although this contradicts the truth. Sometimes a contested transaction is suitable for this definition, which is also considered void and clearly does not comply with the requirements of the law.

At the time of the transaction it is almost impossible to establish whether it is imaginary or not. This information will become apparent much later.

As already mentioned, in accordance with the Civil Code, the alleged transaction is void. And this means that it is in any case invalid, regardless of whether its court recognizes it or not. The consequence of insignificance of the transaction is often restitution, that is, the return by both parties of each other everything that they received as a result of an agreement between them. This is possible provided that they fulfill any obligation, from a legal point of view, invalid. However, not always a fictitious contract should entail restitution.

What exactly is an imaginary transaction for? The reasons can be varied. For example, to make a fictitious lease for the purpose of registering a new legal entity. Or create the appearance of acquiring any property for a loan in a large amount. Or, as an option, a fictitious sale in case of threat of bankruptcy.

The idea of a deal is related to the fact that each of the parties has no intention to fulfill it, while realizing that in reality the agreement does not link them. The same goals of the transaction are hidden from third parties or presented in a false light. And the parties do not intend to change anything in their legal position. As an example, you can also give a fictitious gift of any property to hide it from confiscation.

Imaginary transactions have a number of characteristics. The main ones are the following: the conclusion of the transaction by an improper person, the provision of untrue information to another participant or third parties, the intention of non-fulfillment of the obligations that have appeared and the concealment of real intentions.

Sometimes it is rather difficult to prove the illegality of the transaction, in no small part this is due to the determination of the intent of the parties. Often under the guise of the implementation of the contract of sale is the receipt of a bribe. As a rule, in such cases, it is often suspect that the price of the property being purchased is clearly underestimated.

There have been many fraudulent activities under the cover of fictitious contracts, when one side of the deal set the goal to mislead the other. Such cases are often described by the word "throw". They are expressing gross forms of fraud, involving transactions with dummies or through non-existent firms.

Legal consequences of the conclusion of an imaginary transaction does not provide. The only sanction could be its recognition as invalid, in some cases restitution should take place after that.