The Maximum Amount of Penalty Clause in Monetary Obligations with a Critical Approach to the Supreme Court's Unified Judicial Precedent No. 805

Document Type : Scientific research

Authors

• Rasool Bahrampoori ¹
• Javad Khodadadi ²

¹ University of Tehran

² Isu

10.22067/economlaw.2022.73972.1114

Abstract

Validity of penalty clause in monetary obligations has always been a controversial issue in the Iranian legal system. Due to the exposure of institutions such as the Constitutional Council and the Expediency Discernment Council to the damage of late payment, despite the adoption of laws such as the Code of Civil Procedure this question still remains in the Iranian legal system and it is asked the parties can claim a sum in excess of the annual rate of the Central Bank as a fixed sum, based on the contractual terms? General Assembly of the Supreme Court's Unified Judicial Precedent No. 805 has considered the permission of this matter subject to its non-contradiction with the imperative laws and regulations and the present study with an analytical-descriptive method in order to answer above question, by examining evolutions regarding the damages of late payment in the Iranian legal system, state three jurisprudential, legal and economic analyzes and it has proved that accepting the validity of any amount of contractual obligation in monetary obligations can't be deduced not only from the text of the relevant laws and regulations but in addition to conflict with the law, has many adverse economic effects and exposes the agreement to the suspicion of usury.

Keywords

• Monetary Obligations
• Late Payment Damage
• Unified Judicial Precedent
• Usury
• Penalty Clause

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