An imaginary transaction is one that is completed for the sight, without any legal consequences. From a legal point of view, it is considered null and void from the moment of its conclusion.
The imaginary transaction may seem flawless, not have defects in content and subjective composition. However, at the same time, the parties make an attempt to deceive others, creating the impression that they are in a business relationship with each other, although this is contrary to the truth. Sometimes a disputable transaction is also suitable for this definition, which is also considered invalid 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, an imaginary transaction is void. And this means that in any case it is invalid, regardless of whether its court recognizes it or not. The consequence of the nullity of the transaction is often restitution, that is, the return by both parties to each other of everything that they received as a result of an agreement between them. This is possible provided that they fulfill any obligation that is legally invalid. However, far from always a fictitious agreement should entail restitution.
What exactly is an imaginary deal for? The reasons can be varied. For example, to issue a fictitious lease in order to register a new legal entity. Or create the appearance of acquiring any property to obtain a loan in a large amount. Or, as an option, a fictitious sale under the threat of bankruptcy.
The imaginary nature of the transaction is due to the fact that each of the parties has no intention of fulfilling it, while realizing that in reality the agreement does not bind them. The real objectives of the transaction are hidden from third parties or presented in a false light. And while the parties do not intend to change anything in their legal status. As an example, we can also cite the fictitious donation of any property to protect it from confiscation.
Imaginary deals have a number of signs. The main ones are: the conclusion of a transaction by an improper person, the provision of false information to another participant or third parties, the intention to default on the obligations that have arisen, and the concealment of real intentions.
It is sometimes difficult to prove the illegality of the transaction, to a large extent this is connected with determining the direction of the intent of the parties. Often, under the guise of fulfilling a contract of sale, a bribe is received. As a rule, in such cases, the clearly understated price of the acquired property is often suspicious.
There were many fraudulent activities under the guise of fictitious contracts, when one party to the transaction set out 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.
The conclusion of an imaginary transaction does not provide for legal consequences. The only sanction may be the recognition of it as invalid, in some cases, after this, restitution must take place.