colorable transaction

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A colorable transaction is a transaction that appears bona fide legitimate, but upon further inspection reveals itself as fraudulent or otherwise invalid. Because the term is often used in hindsight when the transaction proves invalid, a colorable transaction often functions as a synonym for sham transaction

A court will not uphold a transaction if they determine it is colorable. For example, in O’Neill v. Delaney the court refused to uphold the sale of a painting worth $100,000 for $10 because the transaction was colorable. 

In addition to transactions, office, title, and claims can all also be colorable

[Last updated in August of 2022 by the Wex Definitions Team]