Legal Definitions - colorable transaction

A colorable transaction is a type of transaction that appears to be legitimate but is actually fraudulent or invalid. This term is often used in hindsight when the transaction is proven to be invalid. It is similar to a sham transaction, which is also a fraudulent or invalid transaction.

One example of a colorable transaction is the sale of a painting worth $100,000 for $10. In the case of O’Neill v. Delaney, the court refused to uphold this transaction because it was colorable. This means that the sale appeared to be legitimate, but upon further inspection, it was found to be fraudulent or invalid.

Another example of a colorable transaction is when a person sells a car to a friend for $1. While this may appear to be a legitimate transaction, it could be considered colorable if the seller is trying to hide the true value of the car from creditors or other parties.

Office, title, and claims can also be colorable. For example, if a person claims to be the owner of a property but does not have the legal right to do so, this claim would be considered colorable.

In summary, a colorable transaction is a transaction that appears to be legitimate but is actually fraudulent or invalid. Courts will not uphold these types of transactions.