Examination of Specific Performance of Obligations in Iranian Law and the Uniform Commercial Code from the Perspective of Economic Efficiency

Abstract

Specific performance and damages are the two main remedies for breach of contractual obligations, and in different legal systems, depending on philosophical, legal, and moral perspectives, they are accorded differing levels of priority. Law and economics, as a consequentialist approach, introduces the optimal structure of these remedies and, considering environmental conditions, determines their prioritization. The most important outcome of such analyses is the clarification of the common objective of legal systems and the manner of its realization through different means, which ultimately leads to efficiency and legal convergence. One of the challenging issues in remedies for breach of obligations is the efficiency of specific performance and its relationship with contract termination and the award of damages. U.S. law tends to prefer damages as the general remedy and allows specific performance only in exceptional cases, whereas in Iranian law, specific performance constitutes the general rule, and termination of the contract is permitted only when performance by a third party is not possible. The theory of efficient breach of contract, which originates from the capitalist society of the United States, faces challenges from ethical, legal, and economic dimensions; ethically, the theory disregards the autonomy of human will, legally, it is inconsistent with the statutory laws of Iran and France, and economically, its efficiency is doubtful, as the social costs resulting from breach of contract are imposed on third parties while the benefits of the breach accrue to the obligor, with external costs being borne by the obligee who played no role in the breach.

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