When ‘pro forma’ is no defence

Two people sign a contract they do not intend to have legal effect as written. Between them, the real agreement usually matters more than the paper. But once a third party acquires the claim in reliance on that paper, the answer can change.

Article 18(2) of the Swiss Code of Obligations addresses precisely this situation. It is a small provision with a substantial consequence: a signer may be unable to escape liability by showing that the agreement was only «pro forma». This is an established allocation of reliance risk, not a newly discovered defect in Swiss law.

What Article 18 protects

Article 18(1) starts with the parties’ true common intention. Paragraph 2 limits that approach: a debtor cannot plead simulation against a third party who acquired the claim in reliance on a written acknowledgment of debt. The focus is the acquirer’s reliance, not simply the existence of a signature. Art. 18 · SR 220

Good faith matters. Swiss law presumes it, but does not protect someone who failed to exercise the attention the circumstances required. Art. 3 · SR 210

A written acknowledgment is not, by itself, a universal cure for a nonexistent debt. In BGE 131 III 268, the Federal Supreme Court explained that it shifts the burden of proof without changing the underlying obligation. The debtor can ordinarily establish that the legal basis is absent or defective. Article 18(2) supplies the particular third-party protection examined here. BGE 131 III 268, E. 3.2

The Ford that became someone else’s

In 2002, the Federal Supreme Court considered an arrangement involving a Ford Scorpio, its owner, a friend seeking finance and two companies. The owner joined a sham lease as a jointly liable debtor. The paperwork presented the car as the leasing company’s property and provided for the transfer of rights to a financing company.

This was not an uninvolved owner whose signature had been forged. He participated in the arrangement, handed over the vehicle registration and signed the ownership and assignment terms. The financing company acquired the contractual package and paid the leasing company. When payments stopped, it claimed the car and money owed.

The Court held the signatories responsible for the appearance they had created. The financier’s good faith was upheld; the owner could not rely on simulation to defeat the transfer. The judgment confirmed the financier’s ownership of the vehicle. 4C.54/2002, 10 June 2002, facts and E. 2.4, 4

That ownership result depended on the documents and circumstances of this transaction. It is not a general rule that any misleading contract transfers another person’s property.

Why the paper trail matters

The useful way to read the case is as a mismatch between two accounts of the same transaction. The participants know the private arrangement; the acquirer sees the signed document. Calling the document a formality does not resolve that mismatch.

Assignment can carry it beyond the original parties. Claims can generally be assigned without the debtor’s consent, subject to statutory, contractual and subject-matter restrictions; a contractual assignment must be in writing. A hidden assignment prohibition may not protect a debtor against an acquirer who relied on a written acknowledgment containing no such prohibition. Arts. 164–165 · SR 220

The practical question is therefore not only «What did we agree?», but also «What does this document invite someone else to believe?»

The protection has limits

The ordinary assignment rules continue to apply. Article 164 governs whether a claim may be assigned, while Article 169 preserves the debtor’s defences against the assignee under its statutory conditions. Article 18(2) provides specific protection against the simulation defence for a third party acquiring the claim in good-faith reliance on a written acknowledgment. It does not otherwise guarantee the claim’s validity or enforceability. Arts. 18, 164 and 169 · SR 220

Timing also matters: a warning sent after an acquisition does not, by itself, undo the acquirer’s earlier good faith. Nor should a simulated agreement, genuinely signed, be confused with a forged document. These are different problems, requiring different analysis.

What to do differently in practice

The strongest response is to prevent the misleading appearance in the first place.

1. Make the signed document accurate. Avoid signing a false account of ownership, liability or payment merely to facilitate someone else’s financing. An oral assurance that it is «only for the file» leaves the central problem intact.
2. Put material qualifications on the paper that will circulate. If rights are conditional or assignment is restricted, address that in the signed instrument. Do not assume a separate, undisclosed side letter will protect you against a later acquirer.
3. Check the whole package. Review acknowledgments, guarantees, insurance assignments and ownership terms together. A document described as administrative can reinforce the appearance created by the main contract.
4. Record what an assignee knows. Where a transfer is contemplated, give the prospective acquirer the actual terms and obtain a clear written acknowledgment. Preserve the documents, communications and chronology.
5. Respond precisely when a dispute arises. Identify the disputed right, notify the relevant parties and preserve evidence. Do not assume that later notice automatically reverses a completed acquisition.

One further distinction matters: judicial deposit under Article 168 concerns a dispute over who is entitled to the claim. It is not a general answer whenever the debt itself is disputed. Art. 168 · SR 220

A signature is part of the transaction

The lesson is narrower, and more useful, than «sham contracts are enforceable». A document can create an appearance on which someone outside the original arrangement is entitled to rely. Before signing, consider that third reader. The private explanation may never reach them.