Contractual Equity as a Remedial Instrument in Dispute Resolution: A Comparative Approach between Iran and England

Abstract

Contractual equity is one of the most significant remedial instruments for addressing deficiencies arising from the rigid application of legal rules and for establishing a genuine balance between the parties to a contract. In English law, the doctrine of Equity, with its independent historical development alongside Common Law, provides courts with a range of effective remedies, including specific performance, injunctive relief, equitable rescission or rectification of contracts, and compensation for non-pecuniary damages. In contrast, the Iranian legal system does not recognize an independent institution explicitly termed “equity”; however, principles such as justice, the rule of no harm, good faith, and judicial discretion in contract interpretation and adjustment of obligations perform functions analogous to those of equity in English law. This study adopts a comparative approach, first elucidating the theoretical and philosophical foundations of contractual equity and subsequently examining its functions in the resolution of contractual disputes within the legal systems of Iran and England. The comparative analysis indicates that English law, due to its dual structure of Common Law and Equity, benefits from clearer, more coherent, and more predictable mechanisms for the application of equitable principles, whereas in Iranian law, the application of equity is more heavily dependent on judicial interpretation and general principles of justice, resulting in less institutional coherence. Accordingly, the study emphasizes that strengthening the position of equity in Iranian law—through the development of the doctrine of good faith, the more formal recognition of institutions such as judicial modification, and the expansion of judicial authority to restore contractual balance—can enhance the efficiency of dispute resolution mechanisms and promote substantive justice in contractual relations. Furthermore, an examination of the English experience demonstrates that the clear differentiation and precise definition of equitable remedies provide a valuable model for improving transparency, predictability, and contractual justice within the Iranian legal system.