The Concept and Foundations of Contract Avoidance in Common Law and the Feasibility of Its Adoption in Iranian Law

Abstract

This study aims to comparatively examine the concept and legal effects of voidable contracts in common law and to assess the feasibility of utilizing their functions within the Iranian legal system. The research employs a descriptive-analytical method and a comparative approach. In addition to examining the institution of the voidable contract in common-law contract law, it analyzes the corresponding concepts in Iranian law and Imamī jurisprudence. The findings indicate that, although both voidable contracts in common law and non-effective contracts in Iranian law are intended to protect parties whose consent has been impaired, they differ fundamentally in terms of their theoretical foundations, the point at which their legal effects arise, and the mechanisms through which the injured party is protected. Under common law, a voidable contract is valid and enforceable from the moment of its formation and retains all its legal effects until the right of avoidance is exercised. By contrast, under Iranian law, a non-effective contract lacks full legal effect from the outset, and the production of its legal effects is contingent upon ratification by the person entitled to grant it. Moreover, the broader protection afforded by common law to bona fide third parties, together with the limitation of the effects of avoidance in certain circumstances, has enhanced the security and stability of transactions, particularly in commercial relations. Iranian law, however, continues to rely on the traditional foundations of Imamī jurisprudence in this area, and the protection of third parties is generally recognized only in exceptional circumstances. The results demonstrate that the direct adoption of the institution of the voidable contract in Iranian law would encounter serious challenges due to the conceptual structure of the Civil Code, the distinction between nullity, non-effectiveness, and termination, and the jurisprudential principles governing contractual validity. Nevertheless, economic developments and the proliferation of complex contracts have revealed the need to expand certain existing legal institutions. Accordingly, this study concludes that, rather than fully transplanting the institution of the voidable contract, developing the capacities of institutions such as non-effectiveness and the doctrine of non-opposability, while strengthening the protection of bona fide third parties, could address the requirements of modern transactions and commercial relations without undermining the coherence of the underlying jurisprudential and legal principles.