WHAT IS A SIMULATED LEGAL TRANSACTION UNDER BOLIVIAN CIVIL LAW?
The Italian jurist Francesco Ferrara defined a simulated legal transaction as one where there is a conscious divergence between the actual will of the parties and the external declaration they make. In other words, the parties create the appearance of a contract or juridical act that does not reflect their true intentions. According to Ferrara, “those who simulate intend for a juridical act to appear real in the eyes of third parties, although it is not meant to have actual legal effects,” often with the goal of misleading outsiders.
DIFFERENCES BETWEEN SIMULATION, FRAUD, AND FORGERY
DIFFERENCE BETWEEN CONTRACTUAL SIMULATION AND FRAUDULENT TRANSACTIONS IN BOLIVIA
Simulation can be either lawful or unlawful. It is deemed unlawful when its purpose is to conceal acts that are prohibited by law or to circumvent legal provisions, such as in fraudulent transactions. In fraudulent acts, the actions are real but legally structured to achieve an illicit goal—such as tax evasion or asset concealment.
DIFFERENCE BETWEEN CONTRACTUAL SIMULATION AND DOCUMENT FORGERY
LEGAL EFFECTS OF A SIMULATED CONTRACT IN BOLIVIA
The Bolivian Civil Code provides the following:
- In the case of absolute simulation, the contract has no legal effect between the parties.
- In the case of relative simulation, the real (hidden) contract is valid if it complies with legal requirements regarding form, substance, and does not aim to harm third parties.
This means that if two individuals sign an apparent contract to conceal the real agreement—such as a simulated sale intended to disguise a donation—the actual contract will be valid only if it meets all legal conditions.
IS A COUNTER DOCUMENT LEGALLY VALID IN BOLIVIA?
Yes, a counter document can be fully valid between the parties, as long as it does not violate the law or infringe on the rights of third parties. This document reflects the actual will underlying a simulated juridical act. However, for it to have legal effect, its existence and authenticity must be properly proven.
Practical example:
Suppose Pedro and Ana sign a notarized property sale agreement. However, they privately agree in a separate document that the sale is not real but intended to protect the property from potential creditors. This private agreement is the counter document. If a third party, such as Pedro’s creditor, challenges the sale, a judge may declare the transaction simulated—provided that Ana can prove the counter document’s authenticity through sufficient evidence.
HOW TO PROVE A SIMULATED CONTRACT?
Proving simulation requires pre-established evidence. This means there must be proof that the parties agreed to simulate the contract. Such proof may include:
- Private documents (such as the counter document).
- Witness testimony, in cases where written evidence is lacking and under specific legal conditions.
- Notarized declarations that are later contradicted by the parties themselves.
In Bolivia, the Civil Code states that a simulated contract has no legal effect between the parties if proven fictitious, and that the real contract will be valid if it meets all legal criteria.
Do you have questions about the legal validity of a contract or need help drafting a counter document with legal certainty? Contact us. Our expert Civil Law attorneys are ready to assist you with professionalism and confidence.
Frequently Asked Questions (FAQs)
What happens if I sign a simulated contract in Bolivia?
The contract may be declared null if proven to be simulated, which could result in civil consequences and potentially criminal liability if it was intended to conceal an illegal act.
Is a counter document legally valid?
Yes, it is valid between the parties if its authenticity is proven and it does not infringe upon the rights of third parties.
Can I use witnesses to prove a simulation?
Yes, in certain cases where there is no written evidence, witness testimony is allowed under civil procedural rules.
What is the difference between absolute and relative simulation?
Absolute simulation produces no legal effect between the parties, while relative simulation may be valid if the hidden contract complies with all legal requirements.
Can simulation be considered a crime?
Yes, if it is used to commit fraud or deceive third parties, it may result in criminal liability.
- Ferrara, F. (1950). Diccionario de Derecho Privado, T. II, pp. 3628–3631. Barcelona-Madrid.
- Ricci. Tratado de las Pruebas, p. 375.
- Código Civil del Estado Plurinacional de Bolivia.
- Jurisprudencia Nacional Civil.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
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- RECOGNITION OF FOREIGN JUDGMENTS AND ARBITRAL AWARDS IN BOLIVIA
- RESIGNATION OF A LEGAL REPRESENTATIVE OR TRUSTEE IN A COMPANY IN BOLIVIA
- DOCUMENT FORGERY IN BOLIVIA DOES NOT EXPIRE AND INVALIDATES CONTRACTS
- EASEMENTS IN BOLIVIA AND THE CONFESSORY ACTION
