Confronting Monopoly by Imposing Limitations on the Contractual freedom: A Case Study of Iranian Law

Document Type : Scientific research

Authors

• hamidreza olumi yazdi ¹
• hamidreza shahbabai ²

¹ allame tabatabai

² allameh tabatabai university

https://doi.org/10.22067/le.v26i15.69758

Abstract

The contract is a vehicle for the transfer of wealth, and the law of contract is the responsibility of regulating this transfer. The contractual freedom principle forms the core of contract law. The principle of the free contract is Interdisciplinary principle that derives from economic and philosophical findings .Contract freedom can be the result of economic freedom in law.  Accordingly, it is the duty of governments to only protection people's freedom in formation a contract, and governments should not interfere in the contract with which they contract with each other, as they do not interfere in the economy.
But over time, the concept of government, the scope of its activities and duties in the community changed, and the government, while maintaining the duty to provide order and security, was responsible for social and economic duties and prosperity, and the concept of a welfare state arose. The goal of the welfare state is to maximize efficiency and maximize wealth, based on the market economy and private property. Private law institutions are also considered as factors influencing the market economy and the contract is a vehicle for the transfer of private property. But experience has proven that free trade does not always lead to maximum efficiency and prosperity, as it became apparent to all that market agents, due to individualist interest, have limited horizons and no awareness and interest in the public interest. Economists say that the conditions that a free market cannot fulfill their goals (efficiency and optimal allocation of resources) are referred to as market failures. In this situation, the government must intervene. Economists, monopoly, information asymmetry, external effect and ... are among the most important market failures. Private law in general and the law of contracts based government non-intervention did not have the means to deal with these conditions. Therefore, public order was the most important legal instrument available to government intervention in the contract and restrictions on contract freedoms, and the courts were able to invoke it without the approval of the new law. Public order evolved along with the role and function of the state in the economy. The interventionist government has also become a regulating government to pursue the best interests of the community with the tools of public law, pursuing economic policies that are best suited to protect the proper functioning of the market. In this way, the scope of the influence of the principle of contractual freedom and the results of this principle, such as the freedom to formation contracts, the freedom to determine conditions, and the freedom to choose the transaction side, were limited and limited, to the point where some scholars spoke of the fall of this principle.
Economic public order is the product of the twentieth century studies has come under the influence of new attitudes to the law, and in particular the economic look into legal rules. The economic public order is based on state interference in the economy and has two major objectives, which are, respectively, to protection the poor and regulate of economic system. The guiding public order approach is to regulate the behavior of market actors in order to achieve maximum welfare and maximize wealth. Although the goal of this approach is the welfare of the community, it does not directly act contrary to the supportive order and is directly aimed at implementing the macroeconomic policies of the state.
Economics from the legal system in a monopoly situation is expecting to confront this phenomenon. The legal system must not only lead the market to competitive conditions but also eliminate the monopoly formation. To this end, competition law has emerged as one of the branches of public economic order.
While justifying the involvement of the government on the economic public order, in this paper, we tried to investigate the question of what the Iranian system of law in the conflict between monopolism and the principle of freedom of contract was adopted?
Efficiency and optimal allocation of resources are considered to be the goals of economics, which in some cases the market will not be able to materialize and will be in short supply. Therefore, government intervention through regulation to regulate the economy and returning to the above objectives is necessary in these cases. Therefore, in many legal systems, the legislature seeks to compensate for these shortcomings by imposing laws contrary to accepted civil rights rules. Antitrust law and laws are set up for this purpose. In Iran, the legislator has also endorsed the Law on the Implementation of General Principles of Article 44 of the Constitution, the Law on the Protection of Consumers and the Law Electronic Laws. The legislator has to make a detailed study of the economic situation of the country, and to consider the economic situation of the country and not to translate the laws of other countries and to use foreign law to implement it with domestic law. Moreover, the freedom of the contract, despite the limitation of the scope, remains the legal principle that its constraints should be regarded as exceptional and only in cases of necessity referring to the exceptions. Consequently, it should be treated with the same sanction for contracts that are detrimental to the competition, because of the opposition to the economic public order, and on the terms and conditions that are in conflict with the contractual nature of the contract which are detrimental to the competition and, as a result, compromise the contract. In contrast, if the condition is not in conflict with the nature of the contract and the ability to distinguish it from the contract, it should only cancel the condition.

Keywords

• Monopoly
• freedom of contract
• market failures
• Economic public order

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