Comparative Analysis of Substitute Contract as ‎Remedy in Light of the Basic Principles of ‎Contractual Liability

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VAKILI MOGHADAM MOHAMMAD HOSEIN

مرکز اطلاعات علمی Scientific Information Database (SID) - Trusted Source for Research and Academic Resources

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Journal: PRIVATE LAW STUDIES Year:2022 | Volume: | Issue: Page(s): 213-233

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Title

Comparative Analysis of Substitute Contract as ‎Remedy in Light of the Basic Principles of ‎Contractual Liability

Author(s)

VAKILI MOGHADAM MOHAMMAD HOSEIN | Issue Writer Certificate

Keywords

Breach of ContractQ4

Substitute Enforcement of ContractsQ4

Impossibility of ‎Enforcement of ContractsQ4

Requirement to Perform Contracts‏Q4

Abstract

The possibility of concluding substitute contracts as remedy by the obligees is considered a controversial effect of the Breach of Contracts. According to this method, the contractual beneficiary is able to conclude a similar contract with a third party without the obligation to enforce the obligator to implement the contract. Due to the substitute contract, the obligee does not miss the opportunity to enter the market and will not incur losses from price fluctuations or the suspension of his property. However, according to the traditional approach in contract law, Breach of Contract and non-observance of the provisions of contracts is not a reason to ignore the contractual obligation. In other words, replacement and termination of the contract is allowed only if the enforcement of contract is not possible. Meanwhile, it is not possible to ignore a valid contract and its effects except as specified by law, while in legal texts or laws of Iran, concluding an alternative contract cannot be recognized as a general rule for remedy. On the other hand, based on legal basics, it has been stated that substitute contract in certain circumstances can be a method of compensation and provide the best way to ensure the performance of contract. This is a punitive compensation of Breach of Contract and should be recognized based on the benefits of the damaged party. To restrict the methods of compensation means the ignoring practical facts and the effects of breaches of contractual obligations, which is also incompatible with the principles of contract law. This article tries to answer the question of whether the use of an alternative contract to compensate can be considered a valid and approved method. In examining the above issue, other questions can be asked, such as what are the principles justifying an alternative contract in contract law? What are the necessary conditions? Can the use of substitute contract be applied to all contracts? What will be the compensation if the costs of concluding an alternative contract increase? Based on the studies conducted in this article, it is safe to say that concluding of substitute contract is a rational and desirable remedy that, in addition to complying with the principles of contract law, can create many benefits. The challenges of applying this method to law can be solved and justified, which is fully compatible with the development of interest-based analysis in contract law. It can be used in all financial contracts. However, it requires conditions that have reasonable bases and provide effectiveness. Therefore, it can be said that there is a basis for using this method in all contracts and agreements. The main justification argument used in this article is the adaptation of the alternative contract to the practical termination of the contract, which causes the injured party to terminate the contract after breaching. He explains his will to do so through the conclusion of the substitute contract. The article is an analytical-descriptive study and considers the legal sources of other countries in the position of examining the nature, basics and conditions of the substitute contract. The main purpose of the article is to assess the compatibility of using this method with the rules of Islamic jurisprudence and Iranian law. The existence of some scattered examples, along with compliance with the principles of Iranian contract law and jurisprudence, makes it possible to use an alternative contract. The prevalence of this method can, in addition to achieving economic efficiency, reduce the number of lawsuits related to Breach of Contractual obligations. Finally, the conformity of the substitution with the principle of contractual liability is another advantage of using this method as a compensation.

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