Use of counter papers needs to be regulated
Have you ever heard of the counter paper? It reflects the real intention of contracting parties and is often covered by another sham contract for several purposes, including preserving the parties’ rights. Today I will discuss this interesting paper and its legal impact.
The counter paper can be defined as a document that expresses the reality of the contract to which the parties intended, as long as it is permissible. The purpose of this paper is to preserve the rights of the parties to confront each other, and to confront others as well. It is worth noting that the counterfeit paper is concealed by another contract and is inherent and in keeping with the formal contract in terms of timing.
The counter paper is only a contract that complies with all legal requirements and is subject to the general rules established for evidence. But, in the absence of a back contract between the parties to the contractual relationship, the real contract is the apparent contract.
The fictitious contracts are divided in terms of legality. There is a legitimate and illegitimate sham contract, which is illegal if it is intended to circumvent the law or harm the rights of others.
As for the form of the counter paper, international regulations differ. Some systems have been developed in a specific formality, some of which leave the freedom to choose the form for the contracting parties themselves.
As for the legal effects of the counter paper, both on contractors and on third parties, it is clear that the legal relationship between the two parties to the contract is based on the real intention rather than the factious contract. This stipulates that contractors are only obliged to do what they want and agreed to, so each contractor may hold against the other by means of this counter contract.
The first steps to prove the counterfeit paper are to prove that it is the contract or the real agreement that the two contractors were keen to cover and conceal. This proof is fulfilled by satisfying several conditions: That the contract is a visible contract, in sync with the contract, and that the contract does not include a reference to another contract the parties colluded to hide, because any reference to the apparent hidden contract — the counter paper — cancels the purpose.
As for the impact of the counter paper on others, they have the right to invoke the hidden contract if they have an interest in it, and to challenge the apparent contract and to prove its fictitiousness.
On the other hand, sometimes a person who has an interest in the contract may insist on the exclusion from the general rule in contracts that only the will of the parties matters, but the rule is not applicable to the case of others who do not know the reality of what was agreed upon. Also, others cannot benefit from this situation unless they are good-willed and do not know about the hidden contract.
If it is not possible to prove the counter paper or a hidden contract, the apparent contract will be applied. Therefore, every person who aims to carry on with a counter paper must be careful in drafting it in a way that clarifies the reality of the intended agreement, and must also be careful not to use this counter paper to conceal illegal behavior, whether to violate laws and regulations or to harm others. While we support this procedure to preserve others’ rights and confidentiality, unfortunately, in many cases, this paper has been used in fraudulent acts. I believe that the regulator must give this paper more attention and codify it in ways to make it a strong and powerful support tool.
• Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif
