The following points are relevant to a declaratory action seeking a finding that a contract is void for simulation under Article 26(2), fifth alternative, of the Bulgarian Obligations and Contracts Act, and seeking to establish the concealed transaction under Article 17(1) of the same Act.<\/p>\n
A contract is simulated when the parties do not intend to be bound in the manner it stipulates. If their only intention is to create an appearance of obligations whose legal effects they do not want, the simulation is absolute. If they intend to be bound, but on terms different from those expressed in the agreement, the simulation is relative. In both cases the apparent transaction is void.<\/p>\n
If the parties intended a different arrangement, Article 17(1) provides that the concealed agreement binds them if it meets the conditions for validity. A claim alleging relative simulation requires proof of the following: 1) that the contract does not reflect the parties\u2019 intentions; 2) what they actually intended; and 3) whether the four requirements for the conclusion of the concealed agreement are met. Simulation is normally shown by a counter-letter recording the true arrangement or by prima facie written evidence within the meaning of Article 165(2), first sentence, of the Code of Civil Procedure. It may also be established by circumstantial evidence if, taken as a whole, the evidence leads unequivocally to that conclusion alone. A person who was not a party to the transaction may establish simulation if they have a legal interest in doing so, that is, if they could derive rights from the simulation and its consequences. Under Article 165(2), second sentence, such a third party may also rely on witness testimony. This approach is reflected in Judgment No. 403 of 5 August 2010 in civil case No. 684 of 2009 before the Supreme Court of Cassation of the Republic of Bulgaria.<\/p>\n
This article is not a legal opinion or advice from our law firm and does not concern any particular situation or legal person or entity. For assistance with a similar case, consult a lawyer who practises civil law.<\/em>
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