The Position of the Principle of Good Faith in the Interpretation and Performance of Contracts in Iranian Law: A Comparative Study of French Law

Abstract

Today, the principle of good faith is regarded as one of the important rules in the field of the law of obligations, playing a significant role in the stages of contract formation, performance, interpretation, and even during pre-contractual negotiations. In a society governed by good faith, the regulation of legal relations becomes more reliable, simpler, and less costly. The present study is based on a descriptive–analytical method and documentary research using up-to-date library and internet sources. Ultimately, the examination of these issues demonstrates that, within the Iranian legal system, good faith is not applicable as an independent theory; rather, the operative criterion in this regard is the authority of objective appearance and the theory of “reliable appearance.” Therefore, the foundation of good faith in Iranian law should be sought in the implied condition arising from the nature of the contract, because the essence of contracts is agreement and interaction. In agreement, the parties seek to achieve a common objective, and in interaction, they endeavor to attain that shared objective. Consequently, good interaction and good faith must exist from the beginning to the end of the transaction. In some legal systems, including France, Article 1104 of the new French Civil Code of Obligations enacted in 2016 recognizes good faith as a mandatory rule governing all stages of the contract, including negotiation, conclusion, performance, and interpretation. This provision is considered a matter of public policy, and even an agreement between the contracting parties contrary to it is devoid of legal effect. In other words, good faith, as a binding principle creating legal obligations, entails commitments and duties for the parties during the formation, performance, interpretation, and exercise of contractual rights. Accordingly, the parties must commence contractual negotiations in good faith, sign the contract upon agreement, and act in good faith in its interpretation and performance. In Iran, however, the legislator did not explicitly address the principle of good faith during the drafting of the Civil Code. This issue has led legal scholars to adopt entirely different views regarding it, and an examination of the legislator’s approach to the principle of good faith from the outset to the present indicates that the tendency toward its acceptance in Iranian law has generally followed an ascending trend.