Journal of Research and Development in Comparative Law

Journal of Research and Development in Comparative Law

The argument and Manner of Modification of Liquidated Damages; Resistance of Judicial Precedent Against an Inappropriate Law (By a Comparative Study of French and English Law and International Instruments)

Document Type : scientific research paper

Authors
Mohammad Hadi Javaherkalam 1
Rasool Kazemzadeh 2
1 Assistant Professor, Department of Private Law, Faculty of Law and Political Science, Allameh Tabatabaei University, Tehran, Iran
2 Judge and Master's degree holder in Private Law, Urmia University, Urmia, Iran
10.22034/law.2024.2038510.1446
Abstract
Juridical developments in different legal systems and international instruments have moved towards modification of manifestly excessive or insignificant amounts of liquidated damages, and by forming a global movement, have been able to persuade legislators to co-operate with them. In Iranian law, although according to the exact wording of article 230 of the Iranian Civil Code judges are prohibited from increasing or decreasing the amount of liquidated damages, in recent years judicial precedent has opposed this oppressive law and has ordered its modification based on various grounds. In this article, in order to establish judicial precedent and standardize judgments, along with comparative studies in French, English and transnational law, two bases for modification have been proposed, first the “no harm rule” and second the narration “As long as the liquidated damages do not cover the total rent”. The more important question concerns the manner and amount of reduction of excessive liquidated damages or adding to an insufficient amount, and in this regard also, by examining judicial precedent and a comparative study of French and English law and international instruments, it is suggested that in order to modify an excessive amount, the amount of liquidated damages should not be equivalent to the amount of actual damages, since the dual function and nature of liquidated damage requires that its amount should be greater than the damage inflicted so that the judge may be able to reduce the agreed amount in an appropriate  and reasonable manner. in case of determined insignificant damage if breach of obligation is due to intentional or gross negligence, the obligor must compensate all the actual damages; Otherwise, the judge, based on reasonable custom, can rule to a proportionate amount beyond the determined amount, up to the limit of actual damages.
Keywords
Liquidated Damage (Penal Clause)
Modification
Actual Damage
Reducing or Increasing the Damage Specified in the Contract
Judicial Precedent
Article 230 of the Civil Code

Subjects

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