Mirghasem Jafarzadeh; Abbas Toosi; Amir Hosein Shah Mohammadi
Abstract
While legal scholars may find it straightforward to determine the permissibility of protecting colors as trademarks based on existing laws and regulations, from an economic perspective, this matter is subject to significant uncertainties. This study investigates the efficiency or inefficiency of protecting ...
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While legal scholars may find it straightforward to determine the permissibility of protecting colors as trademarks based on existing laws and regulations, from an economic perspective, this matter is subject to significant uncertainties. This study investigates the efficiency or inefficiency of protecting colors as trademarks from the perspective of the economic analysis of law. The "lack of distinctiveness", "depletion," and "functionality" of colors are identified as key obstacles and challenges to their protection as trademarks, with their economic rationale grounded in safeguarding free market competition.
The protection of colors as trademarks poses significant challenges and concerns in the realms of Law and Economics, as the monopolization of colors is seriously questioned due to their inherent limitations and characteristics as Public Goods. From the perspective of producers, establishing a distinct color identity constitutes a competitive advantage and a valuable asset, which can incentivize investment in quality and advertising, as consumers recognize and associate the product with that specific color. On the other hand, monopolizing colors as trademarks may lead to restrictions on consumer choice. The rent derived from such monopolization is inconsistent with the economic principles of intellectual property law. The significance of the economic analysis of protecting colors as trademarks lies in the necessity for the trademark legal system to balance the interests of trademark owners on one hand and the public interest of the market on the other.
The economic analysis method of this article is grounded in the theoretical framework of Neoclassical Economics, employing microeconomic indicators such as price elasticity of demand and market share to evaluate the economic impacts of protecting colors as trademarks on search costs, competition, and innovation. The rationale for selecting this method lies in its ability to provide a robust theoretical framework for analyzing the efficiency and welfare implications of legal regulations, ultimately determining whether the protection of colors as trademarks generally benefits consumers and the market or not.
This research, emphasizing the importance of interdisciplinary studies in Law and Economics and utilizing microeconomic tools, examines legal issues in the field of intellectual property. From this perspective, it constitutes an innovation in light of the scarcity of economic analysis within Iran's intellectual property law literature. The added value of this study not only deepens legal scholars' understanding of how economic principles influence legal frameworks but also establishes new standards for future research in this significant yet underexplored domain. At the time of writing this article, the executive regulation pertaining to Article 149 of the Industrial Property Protection Act of 2024 has not yet been drafted or adopted, providing a valuable opportunity for the findings and recommendations of this research to influence the formulation of the new regulation.
In the first section of this research, the legal frameworks and judicial practices of Iran and the United States are examined to determine whether colors can be protected as trademarks, addressing the question: What is the current legal stance of these two countries on this issue? After clarifying the legal positions of both jurisdictions and establishing a foundation for economic analysis, the study explores the economic challenges of protecting colors as trademarks, answering the question: What obstacles arise when protecting colors as trademarks, and how do these obstacles economically impact the market? In the second section, using microeconomic tools, the research investigates: Does protecting colors as trademarks grant market power to the trademark owner, and what are the economic effects of this power? Finally, the study addresses the core question: Is protecting colors as trademarks economically efficient? The data for this research were collected through library-based methods and analyzed using a descriptive-analytical approach.
The findings of this study indicate that if colors are monopolized through trademark registration, in many cases, they may confer "market power" to the trademark owner, as many colors naturally command a significant market share and may even reduce the elasticity of consumer demand in response to price changes. Consequently, protecting colors as trademarks restricts competition and raises market prices on the one hand, while limiting consumer choices on the other. In most cases, protecting colors as trademarks not only fails to reduce transaction costs through lower search costs via optimal resource allocation, but also lacks the requisite efficiency.
Since protecting colors as trademarks is generally inefficient, it is proposed that the executive regulation concerning Article 149 of the Industrial Property Protection Act of 2024, which has not yet been drafted or adopted, clearly and explicitly define the Trademark Registration Office's stance on Color Trademarks. Unlike the previous regulation (approved in 2008), which implicitly accepted the protection of colors in Articles 108 and 120, the new regulation should prohibit the protection of colors alone or, at the very least, make their registration and protection conditional upon demonstrating acquired distinctiveness in the market and proving their non-functionality.
Private Law
Parviz Bagheri
Abstract
With the rapid advancement of artificial intelligence (AI) and its increasing role in various sectors of society, the legal implications of AI's existence and actions have become a pressing issue. As AI systems take on more responsibilities in fields such as healthcare, finance, law, and transportation, ...
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With the rapid advancement of artificial intelligence (AI) and its increasing role in various sectors of society, the legal implications of AI's existence and actions have become a pressing issue. As AI systems take on more responsibilities in fields such as healthcare, finance, law, and transportation, the question of recognizing AI’s legal personality and determining its civil liability is more relevant than ever. This paper explores the legal challenges surrounding the recognition of AI’s legal personality and civil liability, highlighting the difficulties faced by legal systems in adapting to these new realities. The research uses a descriptive-analytical approach to assess the legal frameworks of several countries and analyze how AI-related legal issues are being addressed. The concept of legal personality traditionally applies to human beings and legal entities like corporations. However, AI, with its rapidly evolving capabilities, challenges this understanding. The need to determine whether AI should be recognized as a legal entity—capable of bearing rights and obligations—has become central to discussions of its legal status. Moreover, the civil liability associated with AI actions, especially in cases where harm is caused, presents complex questions for both legal practitioners and lawmakers. If an AI system causes damage through its actions, who should be held accountable? Is it the developer, the operator, the manufacturer, or the AI itself? This paper begins by examining the legal experiences of different countries in recognizing the legal personality of AI. It highlights the approaches taken by jurisdictions such as the European Union, the United States, Japan, and South Korea. These countries have developed various legal frameworks to address the issue of AI’s legal personality, with some granting limited legal rights and others refraining from doing so. The paper identifies the challenges these countries face in holding AI accountable for its actions, particularly in terms of civil liability. The inability of traditional legal systems to attribute responsibility to non-human entities has created significant legal ambiguity.One of the central issues addressed in the paper is the question of civil liability arising from AI actions. As AI systems become more autonomous, the risk of harm increases, particularly in areas like autonomous vehicles, robotics, and AI-based decision-making processes. When these systems cause harm, determining liability becomes a complex task. For example, in the case of an autonomous vehicle involved in an accident, it is unclear who should bear responsibility: the manufacturer, the developer of the AI software, the vehicle owner, or the AI system itself. The paper delves into how different legal systems have approached this issue, with some proposing that the manufacturer or developer should be liable, while others suggest that a new category of liability should be created for AI systems. The paper also explores the ownership of data as another key aspect of AI-related civil liability. AI systems often rely on vast amounts of data to make decisions, but questions about who owns this data and who is responsible for its misuse are significant legal challenges. As AI systems process personal and sensitive data, issues of privacy and data protection come to the forefront. Legal frameworks such as the European Union’s General Data Protection Regulation (GDPR) have started to address these issues, but further reforms are needed to accommodate the growing role of AI in data processing. Furthermore, the paper discusses the need for updating existing legal frameworks to reflect the challenges posed by AI. Many traditional legal systems are ill-equipped to handle the complexities introduced by autonomous and intelligent systems. For example, contract law, which governs the relationships between parties, is based on the assumption that the contracting parties are human beings or legal entities. However, when AI enters the equation, this assumption no longer holds. Should AI systems be allowed to enter into contracts? If so, who should be responsible for ensuring that the contract is executed appropriately? The paper suggests that new legal provisions are required to clarify these issues and provide guidelines for dealing with AI in the context of contracts. In addition to legal reform, the paper emphasizes the importance of ethical considerations in the development and regulation of AI systems. AI technologies should be designed and implemented with principles of fairness, transparency, and accountability in mind. Without clear legal and ethical standards, the risks associated with AI could outweigh its potential benefits. The paper argues that any legal framework addressing AI’s civil liability should take into account not only the legal implications but also the broader ethical concerns that arise from the deployment of AI systems. As AI systems become more integrated into society, it is essential to establish clear legal frameworks that can address the new challenges they present. The current legal systems, which were designed to deal with human and corporate actors, are not sufficient to address the unique issues posed by AI. Legal reform must not only update existing laws but also create new legal structures that can accommodate the challenges posed by autonomous systems. The paper suggests that international cooperation will be crucial in developing globally consistent legal standards for AI, particularly as AI systems operate across borders and involve complex, multi-jurisdictional issues. The paper concludes by advocating for a comprehensive and forward-looking approach to legal reform. It argues that recognizing AI as a legal entity capable of bearing rights and responsibilities is crucial for addressing the civil liability that arises from its actions. However, this recognition must be coupled with legal reforms that clarify who is responsible for AI’s actions and ensure that those harmed by AI systems have access to legal remedies. As AI continues to evolve, the legal frameworks that govern its use must evolve as well. In doing so, the law can ensure that the benefits of AI are maximized while minimizing the risks associated with its use.
Private Law
Sara Solhchi; mehdi zahedi
Abstract
As cultural, artistic, and media constructs, fictional characters occupy a special and increasingly important place in today’s intellectual property rights system. These characters—created in the form of fictional works, films, animations, computer games, advertisements, and other creative ...
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As cultural, artistic, and media constructs, fictional characters occupy a special and increasingly important place in today’s intellectual property rights system. These characters—created in the form of fictional works, films, animations, computer games, advertisements, and other creative formats—possess both significant material and spiritual value. This dual value underscores the necessity for effective and multi-layered legal protection. Fictional characters are not only tools for storytelling and emotional connection but also serve as major commercial assets that can generate extensive revenue streams. One of the principal challenges in protecting fictional characters lies in their inherently composite and complex nature, which makes it difficult—if not impossible—for a single legal framework, such as copyright law, to fully address all aspects of their identity and function.
In this regard, the trademark legal system in the United States has provided a particularly suitable and adaptable platform for the protection of such characters. This has been achieved by the development of judicial procedures and the adoption of broad, evolving interpretations of traditional trademark concepts. The flexibility of the U.S. trademark system allows courts to adapt legal protections to new commercial realities, including the branding and licensing of fictional characters across multiple platforms.
Within the trademark system, the primary and most fundamental criterion for the protection of a fictional character is its distinctiveness—its ability to serve as a unique source identifier for particular goods or services in the eyes of consumers. When a fictional character can function as a recognizable brand that consumers associate with a specific source, it becomes eligible for trademark protection. This type of legal protection is particularly significant and relevant in the entertainment, media, and multimedia industries, where fictional characters play a central and often indispensable role in both branding and marketing strategies.
According to the consistent practice of U.S. courts, when analyzing a character’s capacity to function as a distinctive identifier, trademark protection has been extended beyond just the character’s name. It can also encompass the character’s clothing, appearance, distinctive visual representation, and associated slogans. The present study, using a descriptive-analytical method and relying primarily on library resources, explores in detail the conceptual, analytical, and procedural aspects of this issue. It begins by identifying the specific conditions and essential elements of fictional characters that may be protected under the U.S. trademark system. Following this, it provides a legal analysis of various examples of trademark infringement, such as unauthorized commercial use, dilution of the character’s symbolic value, reputational harm, and cases of unfair competition.
The findings of this research clearly demonstrate that the trademark system in the United States not only possesses the legal capacity to recognize rights related to fictional characters, but also offers mechanisms to compensate for the inherent limitations of the copyright system. This is particularly important in scenarios where the originality or fixed format of the work does not meet the threshold for copyright protection. Among the most important protectable elements are the character’s name, distinctive visual depiction, and widely recognized slogans. These elements may qualify for trademark protection as long as they possess the necessary distinctiveness and can serve to identify a single commercial source. It should be emphasized, however, that such protection is conditional. It applies only when the character has achieved recognition among consumers as an indicator of a specific origin of goods or services—a concept known in U.S. trademark law as "secondary meaning."
From an economic standpoint, fictional characters have evolved into extremely valuable commercial assets for corporations, content creators, and rights holders. In this context, trademark law serves as the primary legal tool for ensuring a return on investment and for exercising control over the commercial use of such characters. Unauthorized use or exploitation of these characters can cause damage to brand reputation, confuse consumers, and result in acts of unfair competition—all of which are issues addressed through the application of trademark principles.
In parallel to the U.S. legal system, the legal framework in Iran has also been examined in this study. The Industrial Property Protection Law of 1403 defines a trademark as a visible sign capable of distinguishing the goods or services of one party from those of another. According to Articles 95 and 96 of this law, distinctiveness and the absence of misleading characteristics are essential prerequisites for trademark registration. However, the Iranian legal system currently lacks explicit and detailed provisions regarding the protection of fictional characters as trademarks. This legal gap creates challenges for character owners in terms of asserting their rights and preventing unauthorized use. While it is technically possible to register the name and image of certain fictional characters—such as “Mr. Jenab Khan” or “Red Riding Hood”—as trademarks, such protection is typically limited in scope to the specific registered element and does not extend to broader aspects of the character’s identity or associated branding.
Given this regulatory gap, drawing insights from the experiences and legal precedents of advanced legal systems, particularly that of the United States, could be highly beneficial for developing more comprehensive and effective legal strategies in Iran. However, implementing such strategies would require careful adaptation to align with the country’s unique legal structure, cultural context, and practical constraints.
Private Law
Ahad Gholizadeh Manghutay
Abstract
The Securities Market Act mentions the option contract but does not specify that contract’s base mechanism. The Stock Exchange’s Directors Board has chosen the method of "commitment to offer transaction” as the mechanism for the option contract. But this mechanism is not compatible ...
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The Securities Market Act mentions the option contract but does not specify that contract’s base mechanism. The Stock Exchange’s Directors Board has chosen the method of "commitment to offer transaction” as the mechanism for the option contract. But this mechanism is not compatible with the requirements of trade, especially the stock market trading requirements. As this article’s hypothesis, seemingly it was necessary to use the suspended transaction mechanism (with suspension in initiative) for this purpose.
Methodology
In this descriptive analytical research paper which is the result of the author's scientific experience, after proposing the solution of the board of directors of the stock exchange market regarding options securities, i.e. the" commitment to offer" solution, and enumerating the shortcomings of that solution, to test the validity of the novel hypothesis of this analytical-descriptive research at first, the suspension initiative in the transaction included in the options contract i.e. the solution of "suspension in initiative in sales "is analyzed. Then, the nature of the suspension, the manner of determining the transaction’s price, the manner of transferring these securities, and finally separation of the suspension of initiative from the suspension of execution are discussed. Using the latter method is more legally justifiable and will have better adaptability to the requirements of the market. Applying the latter method has not been considered by specialists so far, so the present research analysis is completely novel and has no precedent.
Findings & Conclusion
Certainly, suspension in initiative is correct and the legislator has no objection to it. In order to digest the possibilities in commercial transactions, a solution must be considered. So, the option contract must inevitably be formed on the basis of suspension in initiative. Such a contract is a subset of the derivatives market and futures in stock exchange law. As a rule, an option contract should be designed in such a way that the transaction is not in conclusion for the time-being, but it provides the person who needs it with the option to choose the transaction’s conclusion in the future and cause it to conclude, to assign this right to another, or not to conclude it. The pending subject of this suspension is the arrival of a certain predictable time. Of course, a pending subject can be another event or a combination of several events. The initiation of the option contract will have requirements for its initiator, and the relationship created from this initiation is binding for him, and he principally cannot get out of this relationship. In a suspended transaction too, the transaction's basic validity conditions are observed. In this regard, it cannot be said that the transaction has been concluded for the time being and only its execution has been postponed to the future, because in this case, the option will not happen. In other words, the option contract for the applicant cannot be considered based on suspension at impact.
The property of suspension is that it digests the probabilities and problems related to those probabilities, and the option contract, as one of the subsets of future contracts, is a contract that is affected by probabilities. In terms of payment of the premium and the method of determining it, there is no difference between the usual method and the proposed method. Of course, in exchange for paying that amount, the applicant obtains a "commitment to create an offer" in the usual method, but in the proposed method, he obtains the "initiation of offer" himself. In both ways, the acquired "right of choice" can be transferred. The usual method consists of two transactions (the first a covenant and the second a proprietary one), each of which has a separate offer and acceptance, but, the proposed method actually contains only one transaction (principally proprietary) in which three initiatives are intertwined: the applicant's offer, the supplier's acceptance in the form of initiation of a transaction offer, the applicant's acceptance of the transaction. It is not unlikely that this theory will solve many of the scientific concerns of Sunni scholars too, and attract them as well.
The usual solution involves suspension in the impact, but the proposed solution involves suspension in the initiative. In contrast to the usual method, in the proposed method, the option right of a known transaction (e.g., sale, compromise, etc.) is transferred by the applicant (the holder of the right) which its subject matter (whether in whole or in part, and whether in kind, interest, or right) has already been offered (initiated) and created. Therefore, unlike the usual method, in the proposed method, there is no concern about "non-initiation of the offer" at maturity by the supplier. As a result, unlike the usual method, in the proposed method, there is no need to receive a guarantee (obligation deposit) from the option provider, and also, if necessary, there will be no need to make an onerous adjustment of that guarantee.
The intervention of probabilities causes the suspicion of gambling in the option contract in certain cases in inflationary conditions. However, it does not seem that the contract ultimately involves gambling, because, unlike gambling, there is no possibility of winning at all for the supplying party. At the same time, the use of that contract is not necessarily for stock market speculation, and the use of a possible decrease or increase in the price in the market. The possibility of decreasing and increasing the price leads to ignorance and ignorance of the market price during the conclusion can lead to a kind of arrogance (Gharar) and consequently to the stock market speculation. Stock market speculation by creating fake demand in the market leads to oppression of the real needy applicants of the subject of the transaction, and it is against the rule of no harm, whether the purchase is in cash, credit, or advance. In order to avoid this deception, the minimum and maximum price fluctuations must be specified in the proposal initiation. In the proposed method, the conclusion of the transaction takes place at the moment of its choice, and in these securities, it is the conclusion that is suspended, not just execution.
Private Law
Mostafa Etemad Shafee; Ebrahim AbdipourFard
Abstract
The check, as a key instrument in facilitating economic transactions and securing payments, holds a central role in Iran’s legal system. However, challenges in recovering claims due to the issuer’s refusal to honor the check have created significant issues. Through the 2018 amendment to the ...
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The check, as a key instrument in facilitating economic transactions and securing payments, holds a central role in Iran’s legal system. However, challenges in recovering claims due to the issuer’s refusal to honor the check have created significant issues. Through the 2018 amendment to the Check Issuance Law and the introduction of Article 23, the legislature established a mechanism for issuing judicial writs of execution without adversarial proceedings to expedite claim recovery. Nevertheless, ambiguities in Article 23 regarding the nature of judicial enforcement, the process of suspension and annulment of the writ, and the jurisdiction of competent authorities have led to inconsistencies in judicial practice and legal doctrine. This study aims to provide a legal analysis of the judicial enforcement and annulment of Sayadi checks, examining Article 23 and related judicial practices to address the following questions: What is the nature of judicial enforcement of checks? How does the suspension and annulment process function? Which authorities are competent? How effective is Article 23? What are the solutions to its ambiguities? And how does Article 23 align with the principles of commercial instruments? The ultimate objective is to offer a legal analysis and interpretation to resolve ambiguities and discrepancies in doctrine and judicial practice and to elucidate necessary legislative reforms.MethodologyThis study employs a descriptive-analytical method, relying on theoretical, legal, and comparative approaches to analyze the subject. The legal framework includes Article 23 of the 2018 Check Issuance Law Amendment, Articles 8 and 39 of the Civil Judgments Enforcement Law, Note 3 of Article 5 Bis of the Check Issuance Law, and the Dispute Resolution Councils Law (enacted 13/9/2023). The nature of judicial enforcement is examined through a comparative analysis with Article 14 of the Check Issuance Law, Article 11 of the Civil Judgments Enforcement Law, and non-judicial execution. Data were collected from statutes, judicial decisions (including rulings from the Supreme Court and civil courts), advisory opinions from the Judiciary’s Legal Department, and doctrinal studies. Jurisprudential principles (e.g., “reconciliation is preferable to rejection whenever possible”) and legal principles of commercial instruments (e.g., the principle of abstraction) were applied to address ambiguities.FindingsArticle 23, by enabling the issuance of judicial writs of execution without adversarial proceedings, transforms Sayadi checks into judicially enforceable instruments, offering greater efficiency than non-judicial execution through the Civil Judgments Enforcement Law. However, ambiguities in its nature, jurisdiction, and suspension and annulment processes pose challenges. Judicial enforcement of checks is an exceptional institution combining judicial (issuance by a judge) and administrative (expedited issuance) characteristics, subject to challenge through substantive claims. Article 23 recognizes any civil claim or criminal complaint related to the check (e.g., conditional or guaranty checks or offenses) as grounds for suspension, but the absence of a time limit for objections creates opportunities for abuse. The new Dispute Resolution Councils Law (2023) clarifies the relative jurisdiction of the Peace Court (for financial claims up to one billion rials) and the General Civil Court (for amounts exceeding this threshold), with Uniform Procedure Ruling No. 688 (2006) granting the holder discretion to choose the venue (place of issuance, payment, or defendant’s domicile). Article 23 claims are illustrative and are adjudicated by the Peace Court, General Civil Court, or criminal authorities based on jurisdiction. The abstraction principle of commercial instruments limits claims to holders with bad faith or direct holders. Suspension requires a substantiated claim, a suspension request, and a finding of strong likelihood or irreparable harm, but ambiguities in these criteria have caused judicial inconsistencies. Independent claims for suspension or annulment are inadmissible, with annulment being a consequential effect of the main action.Novelty (Value)This study addresses gaps in prior research by elucidating the distinct nature of judicial enforcement of checks and, through a comparative analysis of Article 23 with Articles 14 and 11 and non-judicial execution, clarifies their distinctions and complementarity. It updates jurisdictional frameworks under the new law, highlights limitations on claims against good-faith holders, and establishes the inadmissibility of independent suspension and annulment claims. Its reform proposals enhance the study’s practical value.ConclusionArticle 23 of the 2018 Check Issuance Law Amendment introduces an innovative and effective mechanism for expediting claim recovery and reinforcing the role of Sayadi checks in commercial transactions. By transforming checks into judicially enforceable instruments and leveraging the Civil Judgments Enforcement Law (e.g., enabling debtor detention), it distinguishes itself from non-judicial execution and enhances trust in checks. However, ambiguities in the nature of the writ, jurisdictional competence, suspension criteria, and scope of claims have led to significant inconsistencies in legal doctrine and judicial practice. The Dispute Resolution Councils Law (2023) resolves prior conflicts by eliminating the jurisdiction of Dispute Resolution Councils, assigning relative jurisdiction to the Peace Court (for financial claims up to one billion rials) and the General Civil Court (for amounts exceeding this threshold). By analogy with Uniform Procedure Ruling No. 688 (2006), the holder may choose the venue (place of issuance, payment, or defendant’s domicile). Any civil claim or criminal complaint related to the check—such as claims of conditional or guaranty checks (civil claims) or offenses like fraud or breach of trust (criminal complaints)—may serve as grounds for suspending the writ, but these claims, depending on their financial threshold or criminal nature, are adjudicated by competent authorities (Peace Court, General Civil Court, prosecutor’s office, or criminal court). The abstraction principle (derived from Article 249 of the Commercial Code) restricts such claims to holders with bad faith or direct holders, safeguarding good-faith third-party holders and supporting trust in check circulation. Suspension of enforcement requires filing a relevant claim, a suspension request, and a judicial finding of strong likelihood or irreparable harm by the issuing court, yet ambiguities in defining “strong likelihood” and “irreparable harm” have caused judicial inconsistencies. Independent claims for suspension or annulment are inadmissible, with annulment being a consequential outcome of the main action, effected by the issuing court after the claim’s finality, pursuant to Article 39 of the Civil Judgments Enforcement Law and Note 3 of Article 5 Bis of the Check Issuance Law. To address these challenges, the legislature should amend Article 23 to: clarify the distinct nature of the judicial writ as an exceptional institution with judicial and administrative features; explicitly define the jurisdiction of the Peace Court and General Civil Court; articulate suspension criteria (e.g., defining strong likelihood and irreparable harm); and precisely delineate the scope of claims using terms like “any civil claim or criminal complaint related to the check.” Eliminating unrelated claims (e.g., loss or forgery) given the Sayad system and establishing a mechanism for refunding amounts post-annulment would enhance Article 23’s efficiency, balance the rights of holders and issuers, and promote coherence in the legal system governing commercial law, civil judgment enforcement, and principles of commercial instruments. These reforms would strengthen trust in Sayadi checks as a reliable tool in economic transactions and prevent potential abuses.
Private Law
Roohollah Akhoundi Roshanavand; Hoda Moshfeghi Feyzabadi
Abstract
In most contracts, the main effort of the parties is to regulate their contractual relations to some extent and protect themselves from possible disputes at the time of concluding the contract by agreeing on the terms that are used to determine the rights, responsibilities, and obligations of ...
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In most contracts, the main effort of the parties is to regulate their contractual relations to some extent and protect themselves from possible disputes at the time of concluding the contract by agreeing on the terms that are used to determine the rights, responsibilities, and obligations of the parties. In fact, in order to get rid of the existing risk and liability or the potential liability that will arise in the future and given the non-mandatory nature of the rules related to civil liability regarding the unity of the harmful and the compensator, the parties to the contract can, by mutual agreement, manage and anticipate the duties and responsibilities resulting from the failure to perform the contract and the possible risks arising from the contract according to their wishes and the nature and importance of the subject matter of the contract; unless restrictions such as public order or mandatory laws restrict their freedom. One common way to agree on the limits of liability between the parties is to include a clause in the contract called an “indemnity clause.” Under this clause, certain risks and responsibilities that should be imposed on one party by law and legal rules are transferred to the other party to the contract. The party from whom the damage is transferred to another party is called »indemnified« and the other party is called the indemnifier. The main purpose of agreeing to these clauses is to provide and foresee a clear and unambiguous contractual remedy for the recovery of damages arising from factors such as breach of obligation, breach of representation or warranty, claims brought by third parties against the party to be contracted, and other claims specified in the agreement between the parties. Thus, these clauses can include damages that may result from the breach of obligations (contractual or legal) of one party to the other party to the contract or from the breach of obligations (contractual or legal) of one party to a third party. Today, in the legal systems of common law and civil law, agreements on the indemnity clauses are of great interest to activists in the production, industrial, commercial, and service sectors due to advantages such as transferring or sharing the risk of liability and damages from one party to another and the freedom of the parties to determine its terms. In the legal system of Iran, predicting rules like Taslit and institutions like Guarantor of Jarireh in jurisprudence and insurance and also, the approval of Article 12 of the Civil Liability Law and the acceptance of the possibility of paying the debt by a person other than the creditor in Iranian law, leads us to the conclusion that the agreement on compensation for damages and payment of the debt (contractual and non-contractual origin) by a person other than the creditor and other than the cause of the loss is legitimate and legal. Considering the wide scope of indemnity clauses, the question arises whether these clauses can be applied in construction contracts as well? If the answer is positive, how will the agreement on these clauses be? Regarding construction contracts, in addition to the above, the absence of a ruling by the legislator prohibiting the transfer of liability from potential perpetrators of damage to other parties involved in the construction process is evidence of the possibility of agreeing on an indemnity clause in such contracts. However, the necessity of observing mandatory rules and public order, as well as the principle of deterrence of civil liability, requires us to consider the agreement on this clause invalid in some cases. Thus, in construction contracts, the indemnity clauses can be agreed between the owner [who is also the employer] and the contractor, the employer and the main contractor, the employer and the subcontractor (subcontractor), the contractor and the supervising engineer, the main contractor and the subcontractor, etc. The manner in which these clauses are formulated depends on several factors, such as the circumstances governing the relationship between the parties, the parties' purpose in agreeing to these terms, the type of main contract, the potential risks of the contract, the degree of control each party has over the risks, the bargaining power of each party, and the legal restrictions imposed on these clauses. The indemnity clause in construction contracts can be agreed based on various criteria, like persons and liabilities covered by this clause, the kind of obligation of indemnifier, and the amount of fault of indemnified. It should be mentioned that, according to the principle of privity of contracts, the indemnified cannot be invoked against the injured party on this clause that has been concluded between himself and the indemnifier. Rather, he should first take action to compensate for the damages and then, based on the indemnity clause, take action against the indemnifier.
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