Document Type : Scientific Research
Authors
Abstract
Liguidated damages is anything of value that based on an agreement contractors promise to another when making a contract. They use it as a compensation for contingent losses due to the non-performance of obligations or delay in implementation of the commitments. If the parties have an agreement on the amount of compensation to be paid, it is called liguidated damages and if the agreed amount of compensation exceeds the loss and be considered as an extra fine, it is a penalty clause. One of the topics discussed between the written law and common law is the issue of the enforcement of liguidated damages and specifically, the penalty clause. This article includes the view of the legal systems, written law, common law and also the law of Islamic Republic of Iran about this topic. Furthermore, this article legally and economically reviews the liguidated damages and penalty clauses and also analyzes the efficient system.
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