Private Law Research

The Role of Risk Assumption in the Legal Framework of Mistake regarding the Subject Matter of contract

Articles in Press

Document Type : Research Paper

Authors

iraj babaei
somaye abbasi

Faculty of Law and Political Science, Allameh Tabataba’i University, Tehran, Iran

10.22054/jplr.2026.91176.2994
Abstract
The risk of mistake reflects the probability of non-conformity between parties' assumptions and reality. In modern law, non-assumption of risk is a prerequisite for invoking mistake; as by assuming risk, the discrepancy between perception and reality integrates into mutual assent. Thus, discovering such a discrepancy realizes contractual terms, not an actionable mistake. Accordingly, if mistake risk is allocated to the aggrieved party—expressly or impliedly—they forfeit avoidance rights. However, this rule is not absolute; its validity depends on public policy and parties' true intent. In the Iranian legal framework, this condition is not explicitly formulated, and its application can face Gharar (prohibited uncertainty) challenges. Thus, the primary question is whether non-assumption of risk constitutes a condition for invoking mistake under Iranian law. If so, how can the boundary between valid risk assumption and invalidating Gharar be delineated? Findings reveal traces of risk assumption within domestic institutions. By distinguishing invalidating Gharar from reasonable risks—which legitimize a wide spectrum of uncertainty-based contracts—the suspicion of Gharar regarding mistakes is dismissed. Consequently, risk assumption can be considered a bar to invoking mistake in the Iranian legal system.

Keywords

Contract Law
Mistake in the Subject Matter of Contract
Assumption of Risk
Gharar
Reasonable Risks
Conscious Ignorance
Waiver of Options (Isqat-al-Khiyarat)
Subjects
Private Law Research

Articles in Press, Accepted Manuscript
Available Online from 30 September 2026

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