Abstract

The obligation clause, as one of the important tools for ensuring the implementation of contractual obligations, has a significant position in various legal systems. In Iranian law, this institution is mainly formed based on Article 230 of the Civil Code and the principle of freedom of contracts and allows the parties to determine in advance the amount of damage resulting from the failure to perform the obligation or its delay. In contrast, in the common law legal system, there is a different approach to the predetermined damage clauses and a distinction is made between "actually determined damage" and "penal clauses"; in such a way that punitive clauses are usually not considered enforceable. The aim of this research is to examine and compare the effects of the obligation clause in the Iranian and common law legal systems and analyze its functions in ensuring the implementation of contracts. The research method is descriptive-analytical. The main question of the research is what are the differences and similarities between the effects and functions of the obligation clause in Iranian law and the institution of predetermined damages in the common law system, and what impact do these differences have on the implementation of contracts and the legal security of the parties. The results of the research show that in Iranian law, the principle is the validity and bindingness of the obligation clause, and the court does not have the right to modify it, while in the common law system, the validity of such a clause depends on its compensatory nature and, if it is punitive, it is considered unenforceable. This difference indicates the different approaches of the two systems in creating a balance between contractual freedom and preventing unfair terms.