Validity and Functions of Custom in Iranian Contract Law and the UNIDROIT Principles of International Commercial Contracts: A Comparative Study

Abstract

Custom, as one of the factors influencing the formation, interpretation, and supplementation of contractual relationships, occupies different positions across legal systems. Given the increasing importance of commercial customs in regulating domestic and international contracts, the present study aims to examine and comparatively analyze the status and functions of custom in Iranian law and the UNIDROIT Principles of International Commercial Contracts. The principal research question is what status and functions custom has in each of these two legal frameworks and what capacities the UNIDROIT Principles offer for developing and systematizing the rules governing custom in Iranian contract law. The study employs a descriptive-analytical and comparative method based on an examination of statutory provisions, legal sources, and the provisions of the UNIDROIT Principles. The findings indicate that both systems recognize custom and commercial usages as influential in regulating contractual relationships, interpreting contractual terms, and filling contractual gaps or ambiguities. Under Iranian law, this role can primarily be explained on the basis of Articles 220, 224, and 225 of the Civil Code, whereas the UNIDROIT Principles, particularly Article 1.9, provide a more explicit and coherent framework for recognizing and applying usages and practices established between the parties. Furthermore, in both systems, custom is fundamentally connected with the parties’ autonomy and cannot produce legal effects where it conflicts with their express agreement or with mandatory rules. The principal difference between the two systems lies not in the recognition of custom as such, but rather in the degree of legislative explicitness, the criteria for establishing its existence, and the manner in which the limits of its validity are determined. Accordingly, the UNIDROIT Principles may serve as a comparative model for formulating more coherent standards governing commercial custom in Iranian law. By distinguishing among custom, usage, and established practices and by defining criteria such as prevalence, consistency, recognition, and reasonableness, this model can contribute to the development and greater coherence of Iranian commercial contract law.