A Sham is an arrangement that is not intended (by those who set it up) to have the legal effect that it pretends to have. For example if a fraudulent pretended purchaser in cahoots with a fraudulent would-be Borrower agrees to buy a property at an inflated price on delayed settlement terms and the contract is given to the lender to convince them that the property is worth more than it is, and that the borrower has a viable exit strategy, but they never intend to go through with the sale, then the contract is a sham.