A sham agreement is void

Under Article 26(2), fifth alternative, of the Bulgarian Obligations and Contracts Act, a sham contract is void. Neither party intends to be bound by the apparent transaction, but both agree to create the appearance of a contract. They may intend no legal obligation at all (absolute simulation), or they may intend to be bound by a different, concealed agreement (relative simulation). In either case, the apparent agreement is void under Article 26(2). A party alleging the existence of a concealed agreement may seek a finding establishing it under Article 17(1). To establish that the apparent contract was a sham, it must be shown unequivocally that, at the time of contracting, the parties did not intend its effects. Relative simulation involves two distinct agreements, one apparent and one concealed, as follows directly from Article 17(1). The apparent agreement is the one shown to the outside world: the parties agree to make the contract in a particular form but do not intend to be bound on those terms. Behind their outward declaration lies the intention to make a different transaction. Where the parties disguise their actual agreement with a sham agreement, the rules governing the concealed agreement apply if it meets the requirements for validity (Article 17(1)). See judgment No. 79 of 26.06.2012 in civil case No. 791/2011, Third Civil Division of the Supreme Court of Cassation.

If your case involves a sham agreement or transaction, it is advisable to consult a lawyer experienced in this field.