An agreement for the provision of furniture transport and assembly services existed between two companies, which either party was entitled to terminate with 60 days' notice. After several years, the transport company requested to replace the agreement with an engagement with a sister company but because the sister company required this in order to finance new trucks and secure the necessary bank credit, it requested that the new contract will be without the option to terminate the engagement with a 60-day notice and instead establishing a 7-year term. Despite this, after two years, the transport company terminated the agreement.
The Court rejected the transport company's contention that the section of the second agreement stipulating the contract term was merely a sham. A sham contract is a contract in which there is a discrepancy between the parties' declared intent and their true intent and it is of no effect. While outwardly the parties agree on a specific legal arrangement, their true intention differs. The burden of proving that a contract is a sham is a heavy one. Here, the transport company failed to prove that it was a sham contract; on the contrary, the contract also included a change in consideration, meaning the term of the agreement was not the only modification. Therefore, it was a valid contract, and the transport company breached it when it terminated the agreement before its conclusion. Notwithstanding the above, because the supplier failed to prove its damages, the claim was dismissed.