Understanding Simulation in Legal Acts and Contracts
Item 12: Action for Simulation
Definition
Simulation occurs when parties carry out an act or contract that appears valid but is completely or partially fictitious. It is either nullified or modified by another secret agreement, which reflects the true intention of the parties. Simulation involves two acts or agreements: one that is apparent or simulated, and another that is real but kept secret by the parties.
Classes
Absolute Simulation
Absolute simulation occurs when there is no actual overt act because the parties did not intend to take any action.
Relative Simulation
Relative simulation occurs when an overt act exists but is only partially true because the parties have entered into an act of a different nature.
Simulation can occur under several circumstances, the most common include:
- When it conceals the legal nature of an act
- When some clauses of the overt act are simulated (e.g., a higher price than the actual price)
- When the date of an act is simulated
- When the act involves rights or conveys people or goods that are not the intended recipients
Unlawful Simulation
In unlawful simulation, the real act produces legal effects if it has an illicit cause or purpose or causes prejudice. The act is void and has no effect.
Simulation Involving People
This involves a third party who provides their complicity in the simulation.
Elements of Simulation
- A voluntary act to carry out the simulated act
- The apparent or dummy act corresponding to the declared will
- The actual or secret act corresponding to the real will, which is confidential
The Antiliterature or Contradocumento
Definition
This is the quintessential proof of simulation, a document stating that the act performed by the parties is false.
Effects Between the Parties
- The ostensible act’s invalidity would override the fictitious act with the real or true one
- When the simulated act involves the disposition of assets and rights, these rights return to their owner with their fruits and products, excluding maintenance costs
Effects on Third Parties
With Respect to Third Parties in Good Faith
The declared simulation has no effect to the detriment of third parties who, in good faith and without knowledge of it, have acquired rights or property from the simulated part of the act. This effect is an exception to the enforceability of the contract.
Regarding Third Parties in Bad Faith
The declaration of simulation does produce effects against third parties in bad faith who have acquired property or rights from the parties, knowing that such party had held a simulated ceremony. If third parties have acted in bad faith, they are subject not only to the action of simulation but also to damages, as applied by Article 1281 of the Civil Code.
Deadline for Exercise
Tests of Simulation
When Attempted by the Parties
Between the parties, an excellent simulation test is the written test or contradocumento. The evidence of witnesses is not admissible unless there is a rule of evidence in writing.
When the Action is Attempted by Others
When attempted by third parties, all sorts of evidence are permitted, including witnesses.