For a contract to be effective and to meet the intentions of the parties to the agreement, a set of roughly similar conditions is established in the form of legal rules in all legal systems. The Enforcement of these rules, like any other legal rule and perhaps more so, must be accompanied by effective sanctions, as conceptually, the providing of contract validity conditions without effective sanctions is almost inconceivable. However, the absence of contract validity conditions does not have uniform consequences and may or may not be added after the formation of the contract. In Iranian contract law, these consequences are called “Adam-e Nofuz” (=Non-enforceability) and “Botlan” (=Nullity) respectively. The nullity of a contract is the result of the lack of one or more essential contract validity conditions, and its consequence is the failure to achieve the intended legal effect of the contracting parties, contrary to their will.
The objective of this article is to examine the consequences of the disappearance of these essential conditions of contractual validity after its conclusion in the valid form and before the complete performance of the primary obligations arising from the contract and to determine what happens in this scenario to a contract and parties’ legal relationship. Organizing the termination of the contract in light of its commonality with nullity under the recent criterion (being spontaneous) is the secondary goal of this paper.
Based on this, it needs to be addressed: Can the disappearance of the essential conditions of contractual validity be considered nullity that occurs after the conclusion of a valid contract, or should it be sought under a different heading? Do the effects of nullity always entail annulment, or does its coercive effect have only an essential characteristic? In Iranian law, if after the conclusion of a valid and effective contract, the legal relationship terminates automatically, usually it is said that the contract has been terminated (=Enfesakh), and nullity is related only to the stage of contract formation. So, it must also be explained what relationship exists between the disappearance of the essential contract validity conditions and Enfesakh.
This paper argues that the cause of Enfesakh is the disappearance of the essential contract validity conditions. Therefore, this issue has a common basis with nullity at the time of formation, and the only difference is the timing of the occurrence of the cause. Thus, the disappearance of the essential conditions of contractual validity is a “Subsequent Nullity” that affects a valid contract.
To answer the questions and achieve coherence about the basis of legal termination of the contract, an analytical-descriptive method has been followed: Examining the structure of the contract, its constituent elements, and how it differs from the effect of the contract; A conceptual analysis of a null contract and its distinction from a non-existent contract from the perspective of its impact on the parties' legal relationships; Investigating the characteristics of nullity and studying the effects attributed to it; Researching the use of terminology related to Botlan and Enfesakh terms in Imami Fiqh and Iranian civil law. Based on this approach, the possibility of nullity occurring in a valid contract has been assessed. Subsequently, by explaining the causal basis of nullity, which is the absence of the essential contract validity conditions, the disappearance of each of these conditions before the complete performance of the primary contractual obligations has been examined separately. The effects of this absence on the previous valid contract have also been studied.
The research findings indicate that when, after the conclusion of a valid and effective contract, any of the essential conditions of contractual validity disappear before the complete performance of the contractual obligations, the contract is terminated spontaneously and automatically. For various reasons, this situation can be considered as a subsequent nullity on a valid contract: the unity of the nature of this event with nullity at the time of contract formation, non-essentiality of annulment on the legal structure of nullity, the lack of logical and legal conformity in the timing of nullity and contract formation. Based on this and considering the concept and use of the term “Enfesakh” in Imami Fiqh and Iranian civil law, it is noted that “Subsequent Nullity” logically is identical to and a subset of “Enfesakh” in the two specific (legal termination) and general (termination) senses.
Therefore, it can be said that the disappearance of the essential contract validity conditions resulting in nullity is not contingent on the time of contract formation; rather, attention must be paid to the time of the occurrence of the cause. Thus, whenever, before the complete performance of contractual obligations, one of the causes of nullity, namely the lack of essential contract validity conditions, arises, it results in nullity, and the contract is terminated from that time. In this way, the term “Botlan” in legal and fiqhi texts is clarified. Furthermore, it becomes apparent that the well-known statement that ‘botlan (=nullity) is limited to the stage of contract formation’ has been adopted without regard to the basis of nullity, and fails to reflect a substantive distinction; instead, it merely results from a verbal dispute and lacks a specific rationale. It is also evident that the occurrence of subsequent nullity of a contract may result from one of these circumstances: the waste of the subject matter of the contract or its essential legal terms (for example, the destruction of the subject matter before delivery, the elimination of its fundamental attributes, or the prohibition of the subject of the transaction); the death or incapacity of one or both of the contracting parties in “Jayez” contracts (due to the structural dependency of these contracts on the parties' personalities); and finally, the influence of public order impediments (becoming unlawful the explicit purpose of transaction). In this way, the classification of legal termination of the contract is organized according to the basis of nullity of the contract, which is the lack of the essential conditions necessary for the validity of the contract