contract-disputes (800x618)

A Handy Insight to Breach of Contract Under Iranian Law

Generally speaking and under Iranian Law, the “Specific Performance” of the obligation is the initial remedy, which in case of not being likely to be achieved, entitles the obligee for “Rescission” of the contract and, consecutively, for “Damages”.

By virtue of Iran’s Civil Code, in case of any breach whether in respect of conditions or warranties, the other party may seek the contract to be specifically performed as the primary remedy provided, either by himself or anybody else at the breaching party’s expense.

 

Article 237: “If a provision stipulated in a contract is an affirmative or negative deed provision, the person who has undertaken to perform the provision must execute it and in the event of default the other transacting party may refer to the judge demanding to compel him to perform the provision.”

Article 238: “Where a deed is stipulated in a contract it is impossible to compel the covenantor to perform it but its performance by another person would be possible the judge may cause such deed to be performed at the expense of the covenantor.”

Article 239: “Where it is not possible to compel the covenantor to perform the stipulated deed and the stipulated deed is not such a deed that can be performed on his behalf by another person the other transacting party shall have the right to revoke the transaction.”

As you can see, the Article 238 deals with the 2nd stage which is the performance of the obligation at the breaching party’s expense.

Article 47 of the Iranian Act on Enforcement of Civil Judgments has contemplated the same provision in other way:

“In case the judgment-debt is a definite act to be performed and the judgment-debtor fails to do so, while the same act may be performed through another person, the judgment-creditor can perform thereof through the others, under the supervision of the bailiff, and claim the damages [from the judgment-debtor] …”

Considering the above into account and in general, the obligee would be entitled to claim the specific performance (the first stage), to perform the obligation through the others and at the obligor’s expense (the second stage) and to terminate the contract (the third stage).