Fraudulent contract: annulment and signs

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Ланткевич Кирило

Lawyer

Ukraine / Dnepropetrovsk region

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Publication date: 09.07.2024

I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.

Signs of fraudulent contract:

For the qualification of contracts as fraudulent according to your circumstances, the following points may be important:

• Time of conclusion of the contracts: The contested contracts were concluded after the opening of proceedings or refusal to secure a claim before the first court hearing in the case of recovery of funds. This may indicate an intention to evade responsibility to creditors.
• Counterparty: It is important to investigate whether the counterparty with whom the debtor entered into contracts is bona fide and does not have relationships with the debtor that may indicate a joint agreement to harm the creditor's interests.
• Price in the contracts: If the price in the disputed contracts is significantly lower than the market value of the property being transferred, this may indicate an intention to artificially reduce the property asset of the debtor to creditors.
• Actions of the debtor: If the debtor disposes of a vehicle or other property after a foreclosure action has been brought against him, and if such actions are clearly unconscionable and aimed at avoiding foreclosure by the creditor, this may serve as a basis for qualifying the contracts as fraudulent.

Therefore, the totality of these circumstances may indicate that the contracts concluded by the debtor are fraudulent and are aimed at preventing the creditor from collecting the debtor's property assets. Such actions violate the creditor's property interests and may have legal consequences for the debtor and his counterparties.

Invalidity of fraudulent contract:

The plaintiff has the right to apply to the court with a claim to declare the contract invalid due to the fact that it is aimed at avoiding the collection of the debtor's property by the creditor. For this, the plaintiff can refer to several legal grounds:

1. General principles of civil legislation: In particular, paragraph 6 of Article 3 of the Civil Code of Ukraine (CC of Ukraine), which allows the court to declare a contract invalid if it contradicts the general principles and norms of civil law, including the principles of good faith and equality of parties.
2. Inadmissibility of abuse of the right: Part three of Article 13 of the Civil Code of Ukraine stipulates that the right cannot be used to achieve goals that contradict the law or violate the rights and legitimate interests of others
3. Special norms of the Central Committee of Ukraine: The plaintiff can also refer to specific articles of the Central Committee of Ukraine, which contain grounds for declaring the deed invalid. In particular, Article 234 of the Civil Code of Ukraine can be applied if the agreement is concluded in violation of the rules of fair dealing. Article 228 of the Civil Code of Ukraine can be applied if the agreement is concluded with the deliberate intent to harm the other party.

The plaintiff can use various legal arguments to declare the contract invalid in the event that it was concluded with the purpose of avoiding enforcement of the debtor's property. The court decides on the invalidity of the contract on the basis of proven circumstances and in accordance with the requirements of the civil legislation of Ukraine.

The procedure for declaring the contract invalid:

The procedure for declaring a contract invalid as fraudulent in court may include the following steps:

1. Filing a lawsuit: The creditor, who believes that the contract concluded by the debtor is fraudulent and aimed at avoiding foreclosure, files a lawsuit in court. The claim must clearly state the circumstances that, in the plaintiff's opinion, indicate the fraudulent nature of the agreement.
2. Consideration of the claim by the court: The court examines the claim and determines whether there are grounds for invalidating the contract on the basis of fraud. The court examines all the evidence presented by the parties and may schedule a hearing to collect additional evidence.
3. Evidence: The plaintiff must present evidence that confirms the factual circumstances that indicate the fraudulent nature of the contract. This may include testimony, documents, expert opinions, etc.
4. Arguments of the parties: Both parties have the right to present their arguments regarding the legality or illegality of the conclusion of the contract, its fraudulent nature and possible consequences.
5. Court decision: On the basis of the considered evidence and arguments, the court makes a decision on recognizing or not recognizing the contract as invalid as fraudulent. If the contract is declared invalid, the court can cancel it and determine the legal consequences of such cancellation, for example, the return of property or compensation for damages.

The procedure for invalidating a contract as fraudulent is based on the relevant norms of civil legislation and is considered by the court based on an objective analysis of the evidence and legal arguments of the parties.

Assistance of a lawyer when the contract is recognized as invalid:

The services of a lawyer when the contract is recognized as invalid in court may include a wide range of actions and services aimed at protecting your rights and interests in the court process. Here are the main aspects in which consulting a lawyer can help:

• Legal analysis of the situation: The lawyers online will conduct a detailed analysis of the situation and prepare a conclusion on the possibility of invalidating the contract on the basis of fraud or other legal grounds.
• Preparation of a statement of claim: A lawyer will help you to draw up a statement of claim, which will clearly state the circumstances of the case, evidence of fraud and legal grounds for declaring the contract invalid.
• Gathering Evidence: An important part of preparing for court is gathering the necessary evidence to support your claims. These can be documents, witness statements, expert opinions, financial documents, etc. A types of legal services to collect and organize all the necessary evidence.
• Court proceedings: The lawyer will represent the interests of the client at the court hearing, defending and arguing his claims before the court. He knows how to effectively conduct court discussions and interact with other parties to the case.
• Litigation: The online lawyer advice will prepare the client for the court session, explaining the trial process to him, as well as prepare a strategy and tactics for successfully presenting the case before the court.
• Services of a lawyer during an appeal: If necessary, a lawyer can help with the preparation of an appeal or a response to an appeal of the opposing party, if the court decision will be appealed.