Often in practice, the companies, driven by one reason or another, want to conclude a transaction below the market price of the assets, at a fictitious price, disguising a donation or the actual transaction price. These actions are regulated by the tax laws and can have a definite negative effect on the participants in the transaction in the event of a tax inspection/audit. The purpose of this is to draw attention to another effect of negotiating fictitious prices in legal transactions and especially for those at extremely understated ones.
According to the case-law of the Supreme Court of Cassation (SCC), which is binding on the courts, transactions in which the non-equivalence of the consideration is so substantial that it is practically reduced to a lack of consideration are deemed void as contrary to morality. The law (the Law on Obligations and Contracts) says that transactions which violate moral law are void (Article 26(1), third prefix).
The moral laws are unwritten generally accepted moral norms to which the law has attached legal significance, the legal consequence of their violation being equated with that of a breach of contract. The parties are free to determine the content of the contract, the limits of contractual freedom being set by peremptory legal norms and good morals. A conflict with moral laws exists when fundamental legal principles such as the principle of fairness and good faith in civil law relations are violated. On the question of the criteria for declaring a contract null and void for breach of moral laws on the above grounds, there is a long-standing and consistent case-law of the SCC. The SCC holds that the assessment of whether a transaction is contrary to good morals, which is made at the time of its conclusion, is not limited to its formal content, but all its characteristics and peculiarities should be taken into account. Because of the nature of the defect in question, it is necessary to consider whether the end result of the transaction is compatible with the generally accepted norms of justice and good faith. In the case of transactions for consideration, the examination of the equivalence of the consideration is also relevant to the assessment of whether the transaction is contrary to good morals. A certain objective non-equivalence of the consideration is permissible, since freedom of contract (another basic principle of contract law) implies that the assessment of equivalence is to be made by the parties in the light of their interest. Those transactions in which the non-equivalence of the consideration is so substantial that it is practically reduced to a lack of consideration should be regarded as void as contrary to morality.
In the aforementioned judgment of the SCC, First Trade Section, it was held that a supplementary agreement to an assignment contract, by which the obligation to pay the price of the assigned receivable was renegotiated from conditional to unconditional, would be null and void for being contrary to the morals, when, upon the assessment made at the time of the conclusion of the agreement and on the basis of the facts introduced by the parties and established in the case, it was established that, on the basis of the supplementary agreement, such a relationship between the counterclaims under the assignment contract had occurred and existed, that in fact one of the considerations under the deal is so insignificant that it is practically equal to null. In other words and in short: when the value of one of the considerations (the price) is insignificant and practically nil, this is contrary to the morality and leads to nullity. Last but not least, nullity is the most serious vice from which a transaction can suffer, it is not subject to remedy and its proclamation can be sought indefinitely by limitation in time.
