Defect in expression of will

– Delusion (misguidance)

– Fraud

– Violence

– Threat

– Malicious intent

Misguidance

• A transaction which is entered into as a result of a significant error may be recognized by the court as invalid upon an action by the party which acted under the influence of misguidance.

• The misguidance is material where it relates to the nature of a transaction, the identity, or to any other qualities of its subject which significantly reduce the possibility of its intended use.

• Misguidance in the motives may serve as a basis of invalidity of a transaction only when such motive is included in its contents as a condition precedent or condition antecedent (Article 159 CC).

If the misguidance is a consequence of gross carelessness of the participant in the transaction, or it is covered by his entrepreneurial risk, the court, taking into account the specific circumstances and the interest of the other participant of the transaction, shall have the right to refuse the claim to recognize the transaction as invalid.

Fraud, Violence

• A transaction which is entered into under the influence of fraud, violence, or threat, and also a transaction that the person was compelled to enter into as a result of a combination of difficult circumstances and on conditions extremely unprofitable for himself (herself) which was exploited by the other party (shackling agreement), may be recognized by the court as invalid upon the claim of the victim (потерпевший).

• A transaction which is concluded as a result of a malicious agreement of the representative of one party with the other party, may be recognized by the court as invalid upon the action of the damaged party.

Malicious intent

• In the event that one of the participants of a transaction entered into it with an intent to evade from the implementation of the obligation to a third person or the state, and the other participant of the transaction new or should have known of that intention, an interested party (the state) shall have the right to claim to recognize the transaction as invalid.

Fictitious or Sham Transactions

• A fictitious transaction is one which is entered into only for the sake of appearances, without intentions to cause any legal consequences shall be invalid.

• If one transaction is entered into only for the purpose of hiding another transaction, then the rules shall be applied which are applicable to the transaction which the parties actually had in mind.