One of the limits of the freedom of contract is the infringement and contradiction with legal principles, such as fairness, good faith, prevention of unfair advantage, or generally speaking, good manners. The contradiction with good morals is elevated to the highest degree of vitiation of the legal relationship, leading to its initial invalidity, according to Art. 26, para. 1, proposition third from the Obligations and Contracts Act (OCA). One of the possible contradictions with the good morals of a contract is, apart from its subject, but also the stipulations for unreasonably high (or low) prices, with which economically weak participants in the turnover are unfairly treated, a lack of material resources of one subject is used to benefit another, all transactions aimed at unfair competition.
The listed circumstances can undoubtedly be relevant and should be taken into account when assessing whether a contract is void, not just taking into account the price paid and the value of the good transferred. As stated in Decision No. 588 of 23.11.2015 of the Supreme Court under No. 4334/2015, 1st year, GK, and in Decision No. 1295 of the SAC under Administrative Law No. 5408/2015, the circumstance that the negotiated price is about 36 times below market, however, is not the only thing that would determine the conclusion of the nullity of the transaction due to a contradiction with "good morals". The ethical norms of behavior imposed and observed by people in society in accordance with an established value system are accepted as such. Transactions that unfairly treat economically weak participants in the civil turnover, use legal methods to achieve morally reprehensible results, point to dishonesty and contradict the generally accepted criteria of good faith, as well as family ties between the parties to the transaction. However, the question remains open when in fact it can be assumed that the non-equivalence of the performances is so great that it leads to the vitiation of the entire contract, if the other circumstances surrounding its conclusion are not decisive.
Nullity under Art. 26, para. 1 of the OCA due to conflict with good morals
The bond legal relationship presupposes independence on the one hand and is framed on the other by "good manners" and by imperative rules which, in the case of a sale, determine that the state tax is paid on the basis of the tax assessment, even if a price is agreed which is lower than her. Therefore, the legislator assumes that the price of an immovable property at the will of the parties can be lower than the tax assessment. At the same time, the concept of "good manners" implies a certain equivalence of the counter performances, and in case of their obvious inconsistency, a violation leading to the nullity of the transaction is inferred. This inequality should be such that it is practically reduced to a lack of performance /Decision No. 452 of 25.06.2010 of the Supreme Court of Appeals under City Decree No. 4277/2008, IV year o., GK/, since the equivalence of benefits is initially assessed by the parties and takes into account their legal interest.
The law does not contain a criterion according to which a transaction can be declared void due to a difference in the counterparty obligations of the parties under a contract (sale of property for an extremely low price), but judicial practice has developed more specific parameters - i.e. Decision No. 615 of 15.10.2010 of the Supreme Court under No. 1208/2009 of III G.O. of the Supreme Court it is accepted that nullity there is due to 12 times the lower price from the market of the transferred property, assuming that it is immoral for the agent to negotiate more than twelve times lower value of the properties being sold, negotiating with himself, although he has a power of attorney from the owner of the properties to carry out the sale "to a buyer and at such price as he sees fit" - at an established market price of BGN 109,250.00, the transaction was confessed for BGN 9,100.00.
IN Decision No. 287 of 5.12.2018 of the Supreme Court of Appeals of Ukraine under Case No. 388/2018. it is accepted that nullity there is at a difference of 10 to 20 times in the price of the exchanged property, and in the specific case there was an exchange of shares worth BGN 22,278 for real estate worth BGN 421,860, and shares worth BGN 4,631 for property worth BGN 68,500.
IN Decision No. 420 of 4.12.2019 of the Administrative Court - Sofia pursuant to City Decree No. 408/2019. a contract was examined where a lease was declared for worthless, because with an average annual rental price of about BGN 573,000, the property is rented out for an annual price of BGN 1,000, or about 50 times lower than the average market price.
Nullity is also present, when an assignment contract has been concluded for a claim for BGN 150, together with legal interest, for a price of BGN 1, or over 150 times difference in value of performances – one of which is so insignificant as to be almost nil – Decision No. 392 of 14.12.2018 of the OS - Stara Zagora according to the municipal decree No. 1392/2018.
In another case – Decision No. 29 of 04/09/2020 of the BAS pursuant to No. 17/2020, it is assumed that nullity is present despite good relations and common business objectives between the parties when the difference in performance is between 6 and 158.25 times the price - a total price of BGN 10,000, with a total tax assessment of BGN 61,259.90 and a market value of BGN 1,582,534 indicated in the transaction.
In another case, the court held that 6.82 times lower than the market price of the properties, with a selling price of BGN 2,900 and a market price of BGN 19,765, is a void transaction, because there is non-equivalence of the services in view of the objective established in the case at the conclusion of the contract pursued by the parties to the contract, namely obtaining a material benefit from the buyer at an unreasonably low price under circumstances on the basis of which a reasonable conclusion can be drawn for taking advantage of the buyer from the disadvantage of the seller - Decision No. 383 of 26.11.2021 of the OS - Pleven according to the City of Pleven Decree No. 708/2021.
On the other hand, in Decision of 28.11.2014 of the OS - Burgas according to city ordinance No. 1822/2014. it is accepted that at a difference of 6.8 times there is no nullity, at a market price of BGN 6,128,980 and a contract price of BGN 900,000.
With a selling price of BGN 500 and a market value of BGN 2,692, the court accepted that the excess of the values of 5.4 times does not invalidate the transaction, because apart from the fact that the amount of BGN 500 is not practically zero, the price was agreed between the parties in view of the close relations between the manager of the company and the other party - Decision No. 157 of 02/09/2022 of the Administrative Council - Varna according to City Decree No. 2788/2021.
There is no nullity due to non-equivalence of performances and when the difference is from 4.7 times, with a selling price of BGN 9,700 and a market value of BGN 45,942 – Decision No. 44 of 25.03.2022 of the BAS pursuant to City Decree No. 25/2022
Lastly, in Decision No. 24 of 02/09/2016 of the Supreme Court of Appeals under City Law No. 2419/2015, III year o., GK it is assumed that the purchase and sale of an apartment of a price 2.5 times lower than the market value of the item does not lead to nullity of the transaction due to violation of good morals – BGN 9,900 at an average market price of BGN 25,405.
Accordingly, the practice assumes that practically reduced to zero consideration under the contract is not available when the selling price is equal to approx. 1/4 of the market value of the property at the date of its sale, which would cause nullity. Separately, the court draws attention to the fact that "it is also necessary to take into account the fact that when making a sale between persons in the close family circle, it is customary for our traditions and moral norms to also take into account the moral and ethical relations of affection and mutual assistance between the parties to the contract, which, taken into account along with freedom of contract, are able to justify among themselves an agreement to carry out the transaction at a sale price lower than the market value or tax assessment of the property, without prejudice to good morals"- Decision No. 1312 of 1.11.2018 of the OS - Plovdiv pursuant to City Decree No. 1289/2017.
In lease contracts, the courts respectively deny that there is nullity, when the price is more than 2 times lower /Decision No. 90 of 12.04.2019 of RS - Svishtov under city decree No. 1030/2017./, 4 times lower /Decision No. 403 of 1.10.2021 of the OS - Veliko Tarnovo according to city ordinance No. 79/2021./, and 7-9 times lower /Decision No. 260223 of 13.05.2021 of the RS - Shumen according to City Decree No. 1596/2019./ of the market average.
From the brief review, the general conclusion can be drawn that the jurisprudence generally imposes the criterion that the lower limit at which the court accepts that there is non-equivalence of performance leading to nullity is 10 to 12 times difference between sales price and market value. A transaction may be void even below these values, if other immoral and socially unacceptable goals are also pursued with it, but this should be assessed according to the specific case.
However, it should be recognized that such parameters would not be applicable to all trades. So, for example, when a property costs BGN 10,000 and is sold for BGN 1,000, without any other relationship between the parties and when there are no other reasons, there is a 10-fold difference in values, which can cause nullity. The performance of BGN 1,000 can really be considered as practically zero, if it is assumed that it should be used to acquire an equivalent immovable property. The same would apply to a certain extent in the case of an increase in the sums - a market value of BGN 100,000 and a sales value of BGN 10,000. However, I do not consider that, with extremely high values, such a mathematical ratio would always lead to nullity. If a property worth BGN 20,000,000 (twenty million BGN) is being sold, and a transaction is concluded for the amount of BGN 1,000,000 (one million BGN), this would not be a void transaction due to non-equivalence of performance, despite the difference of 20 times . The first argument in this direction is that the consideration (sale price) of a million is far from being "practically nil", as the case law assumes it must be in order to entail nullity. Next, with extremely high prices and expensive real estate, the market becomes increasingly limited and this leads to a lack of entities able to pay the market price. Such e.g. would be multi-million dollar industrial properties that, even if sold at a tenfold discount, would not be worthless, just bad business deals. In this sense, if it is at all possible to determine value nullity due to non-equivalence of performances, then when the price increases, the difference must grow proportionally, to a certain extent.
The opposite hypothesis is also of interest - whether the purchase of a property at an unreasonably high price can lead to the nullity of the transaction. Such a rare hypothesis would theoretically be possible, but also more problematic. Insofar as the nullity is determined by a "practically zero" consideration, which in such a hypothesis would be real estate, then the same should be "one nothing", and the price paid for it – tens of times higher than its market value.
Invalidity of a contract concluded for reasons of extreme necessity on manifestly unfavourable termsunder Art. 33 of the OCA
Destruction due to extreme need and extremely unfavorable conditions can be requested within 1 year from the conclusion of the contract, according to Art. 33 of the OCA, as per Decision No. 452 of 25.06.2010 of the Supreme Court of Appeals under City Decree No. 4277/2008, IV year o., GK the prerequisites must be present cumulatively:
– a state of ultimate need, determined by such a state of the subject, which forces him to conclude the transaction;
– the presence of a causal link between the condition to conclude the transaction and
– the transaction itself was concluded under clearly unfavorable conditions.
The practice assumes that if the prerequisite for a state of extreme need is absent, a request for annulment of a contract would be unfounded, i.e. at the time of the transfer of the property, the seller must be short of funds, as well as his overall condition does not allow the satisfaction of basic needs, which condition would prompt him to enter into such a contract. In the absence of such a condition, e.g. sale price of 3 times below the market price does not make the contract voidable if the person was not in extreme need – Decision No. 452 of 25.06.2010 of the Supreme Court of Appeals under City Decree No. 4277/2008, IV year o., GK. It is interesting to note that the Supreme Court accepts that extreme need e.g. it is not the lack of means to lead a bohemian lifestyle and heavy use of alcohol, if there are no health problems or addictions associated with it – Decision No. 380 of 15.10.2012 of the Supreme Court of Appeals under City Decree No. 1015/2011, IV year o., GK.
In specific cases, the practice assumes that is not a voidable contract even if made at 28 times difference from the market price, if the seller was not in dire need – Decision No. 1484 of 2.12.2010 of the OS - Varna according to the City of Varna Decree No. 1560/2010, GO. However, this contract is void, as follows from the statement regarding the claim under Art. 26, para. 1 of the OCA due to conflict with good morals.
However, a contract due to extreme necessity concluded at a close price is voidable 5 times below the market price, with a selling price of BGN 9,500 and a market value of BGN 44,622 – Decision No. 316 of 8.12.2016 of the OS - Sliven under city ordinance No. 93/2016., Decision No. 22 of 04/05/2017 of the BAS pursuant to City Decree No. 33/2017, Decision No. 24 of 11.01.2017 of the Supreme Court of Justice under City Decree No. 2841/2017, III year o., GK.
There is destruction if a property is sold by persons who are over-indebted on their loans and sell the property at a price with 40% lower than its market value, i.e. 1.69 times difference, with a selling price of BGN 42,500 and a market value of BGN 71,898.71 – Decision No. 87 of 10.07.2017 of the Supreme Court of Appeals under City Law No. 3941/2016, III year o., GK. It is in a similar sense Decision No. 218 of 15.11.2010 of the State Administrative Court of Ukraine under City Administrative Order No. 423/2010.
IN Decision No. 261295 of 20.11.2020 of the SGS pursuant to City Decree No. 16915/2017. it is accepted that at a selling price of BGN 64,835.76 and a market price of BGN 101,000, there is destruction due to 1.55 times difference in performance value, or 35.80% price reduction.
However, there is no indestructibility when paying a price equal to 94.73% from the actual market value – BGN 73,233.20 and BGN 77,310 – Decision No. 1829 of 06/9/2022 of the RS - Varna under City Decree No. 14282/2021.
From the jurisprudence presented, it can be concluded that voidable would be contracts for the sale of real estate due to extreme need and manifestly unfavorable conditions when there is even a 36% reduction in price compared to market value, or about 1.6 times lower value. In the case of a difference in price from 1.6 times to 10 times, there would be voidability, and for cases over 10 times - nullity, with the clarifications made earlier that in some cases other conditions should also be present, as well as that in case of an increase in value for there to be nullity or voidability the difference must also increase.
Such inferences can be troubling in themselves, as a price cut from the 36-40% can sometimes just look like a good deal and an enticing discount, without ever factoring into the buyer's judgment that such a deal could turn out to be destructive. .
Valuation of real estate
The values set forth in assessing whether a contract is void or voidable raise the logical question of the valuation of real estate, or more specifically of the subject of the transaction in a broad sense. It is of interest Decision No. 119 of 22.03.2011 of the Supreme Court of Appeals pursuant to Administrative Order No. 485/2011, I year o., GK, claiming that in the latter it was assumed that nullity was present "at twenty-eight times the price". The last decision is also cited in other court decisions, as well as in scientific and practical articles and developments, but in fact Decision No. 119 does not declare the procedural contract in it to be null and void, on the contrary - it annuls Decision No. 24 of 07.01.2011 under City Decree No. 2005/2009 of the Varna District Court and the claim to declare the contract null and void is rejected, as it is established that "when determining the market valuation of the ideal part of the yard, the demand and supply for only the ideal part of the property is not taken into account", when in fact the ratio between sales and market value was "less than 1 in 4".
The question of the methods and comparative analogues used in real estate valuation will always be relevant, as far as market values are not a constant value. Court practice assumes that the actual market price of the property is that value that takes into account not only the specific technical condition of the dwelling (time of construction, materials, dilapidation, etc.), but also the economic parameters determined by the supply and demand on the regional market of real estate - item 7 of TR No. 1 of 19.05.2004 of the Supreme Court of Appeals under city d. No. 1/2004, OSGK, Decision No. 57 of 15.09.2022 of the Supreme Court of Appeal under City Decree No. 2309/2021, II year o., GK.
In some cases, there is also a normatively determined evaluation methodology - e.g. in the Ordinance on Valuation of Land Properties in Forest Territories (adopted by PMS No. 236 of 3.08.2011, amended and supplemented No. 34 of 3.05.2016), or in Art. 16, paragraph 1 of ZKPO, which refers to § 1, item 10 of DR of DOPK, which in turn gives the following definition of methods of determining market prices: a) the method of comparable uncontrolled prices between independent traders; b) the market price method, where the usual market price is the price used in the process of selling goods and services in an unaltered form to an independent partner, reduced by the costs of the trader and by the usual profit; c) the increased value method, in which the usual market price is determined by increasing the cost of production by the usual profit; (d) the transaction net profit method; e) the distributed profit method. The methods are also developed in Ordinance No. H-9 of 14.08.2006 on the order and methods of applying the methods for determining market prices (issued by the Minister of Finance, promulgated, SG No. 70 of 29.08.2006 ), applicable to the application of the methods of determining market prices between related parties for the purposes of taxation.
Apart from the mentioned normative acts, applicable in public law relations, based on Art. 27, para. 1, item 5 of the Law on Independent Appraisers in Bulgaria are adopted and effective Bulgarian assessment standards, in force from 01.06.2018, which are mandatory for independent appraisers, based on Art. 18, item 3 of the ZNO, and should be applied when making assessments in civil cases with the subject of nullity and/or annulment of transactions due to non-equivalence of benefits.
Reduction of prices for notarial deeds
Attention should also be paid to a widespread phenomenon, which in many cases would have a direct relationship with the assessment of the non-equivalence of performances, namely the mass practice transactions to be confessed at prices from tax assessment, or under tax assessment, in order to save taxes and fees. On the one hand, such a transaction, with a price stated in a notarial deed of tax assessment, and in the absence of any evidence of additional payment of the price between the parties in cash, may be rendered void or voidable by that fact alone—disguising the true value of the transaction, when the actual market prices are many times higher.
This phenomenon would in some cases have another consequence – impossibility to make an estimate of actual market value due to lack of similar transactions to use as market analogues, which are recognized at market prices - e.g. in Decision No. 1140 of 2.02.2007 of the Supreme Administrative Court under adm. d. No. 10296/2006, III o. attention has been drawn to the fact that during the evaluation of the case of 23 comparative analogues - notarial acts, 21 were recognized at prices according to tax assessments, which led to an understated average market value. In this sense, a void or voidable transaction may be valid if there is widespread concealment of sales prices for similar real estate.
Ivan Nikolaev, attorney-at-law
 Topurov, P. Nullity of the contractual clause for remunerative interest due to violation of good morals. IUS ROMANUM, no. 1/2019
 Pavlova, M.. Civil law. Common part. Sofia, Sofia-R, 2002, p. 533.
 Part of the calculations in the presentation were made on the basis of the values indicated in the court documents, if such were not made by the court.
 The question of the content of "good morals" is developed in great detail by Groisman, S. The concept of "good morals" and the question of identifying morals protected by law. Theo noster. Collection in memory of Ch. Assistant Theodor Piperkov. Sofia, 2014, p. 344.
 In Decision No. 8 of 13.01.2020 of the Administrative Council - Silistra pursuant to Municipal Decree No. 304/2019, a consulting contract was considered, declared null and void due to an unreasonably high price for the service for services that were essentially performed with resources of the contracting authority.
 E.g. in Decision No. 24 of 02/09/2016 of the Supreme Court of Appeals under City Decree No. 2419/2015, III year o., GK.