Unity or Plurality of the Foundation of Contractual Remedies: A Comparative Study in Common Law and Iranian Law

Document Type : Research Paper

Author

Assistant Professor of Private Law, Bandar Anzali Branch, Islamic Azad University, Bandar Anzali, Iran,

Abstract

Abstract
One of the important questions in the descriptive theory of contracts is related to the basis of contractual remedies. The question addressed is regarding the basis of each of the methods chosen by the legislator as a remedy for breach of contractual obligation and whether this basis is the same for all types of remedies. The answer to this question requires the presentation of an interpretive theory that helps us to understand and reform the existing legal system and also assists in presenting a general theory of the contract law system. In this article, in response to the proposed question, a comparative study has been conducted on the two legal systems of common law and Iranian law.
In the common law legal system, though with slight distinctions in different countries, two general methods of contractual remedies are provided: The first type of remedy is the court's order to the defendant to perform the obligation as promised in the contract, and the second type of compensation is damages, which is usually in the form of expected damages. Some lawyers in the common law believe that these two methods follow a single basis, while others believe that there are multiple bases for the justification of remedies. According to the first theory, damages are considered a particular type of performance, and both specific performance and damages confirm the original obligation. This theory, in a way, establishes the principle of the domination of will in justifying both remedy methods. The second theory, which supporters of civil recourse theory defend more, holds that the court issues the duty to pay damages, and it is an entirely new obligation whose purpose is to compensate for a civil wrong. Contrary to the order to specific performance, which is a response to rights, paying damages is a response to wrongs.
In Iran's legal system, there are several remedies for breach of contractual obligation: the right of lien (in bilateral contracts), specific performance, damages (for delay in performance or non-fulfillment of obligation), and termination of the contract (right of rescission). There is no coherent and unified theory regarding the foundation of these remedies, and most legal authors have discussed the ground of each one separately and independently from each other. For example, regarding the basis of the right of lien, the principle of mutual dependency of considerations, the principle of balance, the will of the parties, and the existence of mutual obligations have been mentioned. Concerning the foundation of specific performance, sometimes the domination of the will and sometimes the community interests have been invoked. Regarding damages, some have pointed to the parties' will and others to the legislator's order. For the basis of the right of termination, the conditions included in the contract, the custom and usages of resorting to mutual obligations, and finally, the necessity for total compensation for the loss have been invoked. By studying these theories, we can conclude that Iranian jurists do not believe in a single basis for these remedies, and as a result, they favor the view of plurality.
In this research, I have claimed that the different ways of contractual remedies follow a common basis, and all of them are derived from the objective will of the parties. Then, the legislator's purpose is to guarantee the collaborative will of the parties. In other words, all the methods of remedies can be considered to be rooted in the objective and collaborative will of the parties, which is guaranteed and supported by the legislator. The collaborative will realized during the contract's conclusion, sometimes explicitly and sometimes implicitly, contains customs, conceptions and expectations that result from a long-standing and enduring process of evolution in an economic and social context. The parties do not enter into a contract in a vacuum and are more or less aware of the customs and laws that have been formed concerning the contract in question. They expect contractual obligations to be performed and often this expectation is fulfilled, but when this expectation is not met, they go for what they expect rationally and logically, and this expectation is a function of economic and customary logic. In this way, specific performance, right of lien, damages, or right of termination are all customary expectations that can be discovered and recognized in the minds of contractual parties as community members. According to these customs and based on them, the legislator does not get away from ensuring the parties' collaborative will and chooses remedies rooted in these custom-based wills. By defending the idea of unity in contractual remedies and relying on the objective or customary will of parties, it is possible to distinguish between the two traditional areas of private law: contract law and torts. This division draws a fine line between them and requires a thorough understanding of the contractual system.
Another advantage of this theory is that it raises the possibility of presenting a defensible contract theory that can provide a coordinated and coherent interpretation of the contract system.

Keywords


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