Preservation of Contracts Through the Application of Damages Beyond Actual Damages in Iran and the US Law

Document Type : Scientific Research

Authors

1 Ph.D. Student in Ayatollah Amoli Branch, Islamic Azad University, Amol, Iran

2 Assistant Professor, Department of Law and Political Science, Faculty of Law and Political Science, Mazandaran University, Babolsar, Iran.

3 Assistant Professor, Department of Private Law, Ayatollah Amoli Branch, Islamic Azad University, Amol, Iran.

Abstract

Preserving rights and obligations and ensuring their enforcement stand as key objectives of contract law, underscored through various legal principles. Nevertheless, instances arise where one party deliberately and opportunistically breaches a contract. If the breaching party stands to gain benefits beyond mere damages, this trend could propagate contract breaches and undermine the fundamental principle of contractual necessity. Thus, our primary focus is to explore deterrent measures against such breaches. Creating effective deterrence poses a significant challenge within Iranian contractual liability laws, where such mechanisms are seldom evident. Ultimately, we argue that conventional rules of damages lack adequate deterrence against efficient and opportunistic breaches, necessitating compensation exceeding actual damages in these instances. This approach mirrors practices in US law, incorporating punitive damages and recovery of benefits stemming from opportunism (disgorgement). If this approach adopted in Iranian law and met with requisite conditions, such measures could yield a substantial deterrent effect.

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Main Subjects

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