Effects of Reciprocal Obligation: According To Iranian Laws

Transcription

1 Studies in Social Sciences and Humanities Vol. 3, No. 4, 2015, Effects of Reciprocal Obligation: According To Iranian Laws Sosan asl Sharhani 1 Abstract Cautionnement or pledge contract is among personal obligations and its main effect, according to Shiite jurisprudents, is transacting obligations. However, most of the public canonists consider the main element of this contract as guaranteeing the obligations. Anyhow, some of them consider it as latitudinal obligation and the others consider it longitudinal. Both, in Shiite sect and in undemonstrative jurisprudence, it is believed that transfer or guarantee could be dominated by agreement, between the recognizee and recognizor (obligee and the guarantor). But, Imamieh (Shiite) jurisprudents unanimously consider the nature for pledge contract as transferring objects, and most of the public consider it as an obligation. Pledge contract and its effects has been referred to as designated contract, in Iranian civil law, and most of the regulations of this contract in the civil law have pursued Imamieh jurisprudence, to expedite the transfer effect of the cautionnement. But, according to the author, the definition of act 684 of the civil law is not allocated to the transferring effect of the obligation and could comprehend both theories of transfer and obligation, based on the common intention of the parties. On the other hand, the stronghold of the civil legislator in acts 699 and 723 indicates acceptance of obligation-to-obligation security, in case of the parties agreements. In bilateral or reciprocal contracts, the obligation of each party of the contract for the original received object is obligation for giving designated or definite exchange, which is called: reciprocal obligation. Keywords: Obligation, reciprocal obligation, contractual pledge, transaction, despoil of the object of sale. 1. Introduction According to jurisprudents, the word obligation means undertaking and commitment, used sometimes in the present law as equivalent to responsibility. Responsibility in Farsi language means warranty, obligation and reproach (Dehkhoda dictionary, Tehran University Press, 1951). Responsibility as a subject is synonym of the words such as accepting and undertaking, obliged, and committed. As an object, it is equivalent to the words or phrases such as obligated, in charge of or under his/her obligation (Dehkhoda dictionary, Tehran University Press, 1951). Thus, some believe that the word responsible is referred to a person, who is transgressing (Dr. Nasser Katousian, Irrecusable obligations (tortious liability), law of torts, Tehran University, 1995). It seems that responsibility is not a proper translation of security, and regarding the latent concepts in it is mainly meaning reproaching or expostulation, derived from security (obligation). Reproaching is an affair out of obligation and pledge (A.A. Amid Zanjani, Causes of security, Mizan publication, Tehran, 2003). The colloquial term indicates the literal meaning of it (A.A. Amid Zanjani, Causes of security, Mizan publication, Tehran, 2003). Chapter One Concepts Section 1 Lexicology of Reciprocal Obligation Definition of Reciprocal Obligation In bilateral or reciprocal contracts, the obligation of each party of the contract for the original received object is obligation for giving specified or definite exchange, which is called: reciprocal obligation. If the 1 Department of Civil Law, Shoushtar Branch, Islamic Azad University, Shoushtar,Iran Research Academy of Social Sciences 179

2 S. A. Sharhani object of sale is exactly specified, transfer of the owned object is spontaneous and unconditional, in our law (item 1, clause 362 of the civil law). But, handing over the object of sale and paying the price do not occur, immediately after sales. It is an obligation that both parties are bound to perform. The obligation that is created by concluding the contract and terminates by its execution is not unilateral, but its existence depends on the other party and by collapsing a side, the other will also be deprived. Although usually this obligation is discussed in despoiling of the object of sale before handing over and despoiling of the object of sale on optional security, but it seems that it is not created by despoiling any of the two exchanging parts, and its origin is concluding a contract. The obligation that occurs on the obligation of the other party is called reciprocal obligation. Therefore, in defining the reciprocal obligation, it can be said that it is obligation to pay revocable exchange for a received object. According to clause 387 of the civil law, if the object of sale is despoiled before handing over, the transaction shall be cancelled, and the price should be returned to the customer. However, guaranteeing the seller or exchanging the security are not stipulated in that article. Legislators have called the security or obligation that according to the contents of this clause is undertaken by the seller, as reciprocal obligation (N. Katousian, Designated contracts, Tehran, 1994; Dr. H. Safaei, Civil rights ). However, since the subject of clause 387 of the civil law is security of the seller in case of despoiling the object of sale, it is also called despoiling security. Section 2: Types of Sales In pursuing the viewpoints of jurisprudents, sale is defined briefly in clause 338 of the civil law, as follows (Sheikh M. Ansari, Makaseb: courtesy of: Golpaygani, Sangi publication, Tabriz, 1275 H.): Sales indicate possession for a definite exchange. It has different types. Types of Sales are as Follows: Sale for Possession By acquirement of sales, it means that after accepting by both parties and immediately after concluding the contract, ownership of the object of sale is transferred from the seller to the buyer and the ownership of the price is transferred from the buyer to the seller, without any extra actions for transferring the possessions by the parties. According to clause 338 of the civil law, possessing the object of sale is an assured affair and it seems that sale in Iranian civil law is considered as ownership. But, in studying causes 350 and 351 of the civil law and types of sales, we can see that object in clause 338, it means specified or personal object, since it is in this state that after requiring and accepting, the buyer shall have the rights on the object. In addition to the problems regarding clause 338 of the civil law, there is another problem, which is conflicting this clause with clause 183 of the said law. Since as it was observed, clause 338 indicates possession, but the legislator states in clause 183: Contract is when one or more people undertake an obligation with another one or more people, which is admitted by them. Presumably, the indication of contracts is only providing the obligation, though this presumption should not be considered, since contract or even breakup of a contract may indicate possession. According to many legislators, requesting the termination of contract is a contract, and we know that it means breakup of the contract. However, some believe that requesting the termination of contract is not the real concept (Dr. M. Shahidi, Falling of obligations, Majd, Tehran, 2002). But, this idea is not quite right and many legislators do not agree with it, since a legal phenomenon is not necessary for a contract, for its elements to be collected. According to some legislators, to eliminate the conflict between clauses 338 and 183, according to clause 183, the indication of contracts is creating obligations, and if the obligation is executed immediately after being made, the indication of contract is ownership, as stated in clause 338 of the mentioned law. However, in case of delays in executing the undertakings, the contract is directive or pledging (N. Katousian, Definite contracts, exchanging transactions and possession contract ). 180

3 Directive or Pledging Sale Studies in Social Sciences and Humanities According to the last parts of clause 350 of the civil law, the object of sale may be the whole obligation. In this case, provision of sales contract is removed from the possession state, and the effect of sale shall be providing commitment and not transferring of ownership, since after concluding the purchasing contract, the buyer cannot have any claims on the rights for the objective transaction. In defining the whole object, clause 351 of the civil law states that: In case the object of sale is general and related to individuals, some legislators, for justifying the state of transfer of the ownership when the object is a whole, believe that: Immediate and unconditional ownership is not purchasing or sale contract. It is right that if the object of sale could be belonged to another, the ownership is transferred due to purchasing, but it cannot be claimed that purchasing could not be verified, unless by possession, since it is subjected non-definite subject of contract (N. Katousian, Definite contracts, exchanging transactions and possession contract ). Some legislators believe that definition of clause 338 of the civil law also includes the whole object. They express that: The two following items should be considered for transferring the ownership: a- Effective transfer of ownership (simultaneous with requiring and acceptance) b- Target transfer of ownership, even if the transfer is not simultaneous with requiring and accepting What should be considered as the second element of sale is the second item and not the first one. If we consider the second item in the clause 338 of the civil law, then no problems shall be there for inclusion of this clause with regards to purchasing the designated object and the whole object, and clause 338 shall at the same time be involved with both types of sale. We should not restrict this clause to only transferring of designated objects (Jafari Langroudi, Legislative encyclopedia, Amir Kabir publication, Tehran). We believe that the logic is not correct, since if the object of sale is not transferred by the time of requirement and acceptance, one cannot say that the sale is about possession. The contents of clause 338 are so strong not to be ignored, and also include the whole object within it. On the other hand, it cannot be concluded from his introduction that clause 338 includes the designated as well as whole objects. In fact, we should agree with the first group and say the basis of sale is not that the object of it to be immediately transferred, otherwise we shall face problems. However, if money is transferred in the case of whole objects, the transfer shall not be prompt. Section 3: Classification of Objects There are three types of objects: Specific properties, designated whole properties, whole-objects (properties) due to obligations Specific Objects Specific object or designated object or personal object is a property that is exterior and apart from other definite properties. It has two types: Separated specific property and common specific property, of which the separated specific property is a property, which all its parts belong to an owner with no partners, but the common property is one that has numerous owners, who share every parts of the property. Designated Whole Property (object) Designated whole property (object) is of specific amount of property, which its parts are equal with each other in every respect; i.e. regarding material, shape or price, such as selling one ton of wheat out of ten specific tons in a warehouse, or selling 50 chairs out of 200 specific chairs. ; These 50 chairs are considered as a whole, although the object of sale is not observed, but since the objects should be given out of specific property, it is said that the object of sale is expressed as specific object. 181

4 Whole Object (property) S. A. Sharhani It is a property that according to the subject of liability, it is a general debt, and its specifications and amount are specified in the specific contract or obligation. Its example is a new full-automatic Peugeot 206 with boot. In such obligations, the oblige is not obligated to hand over a specific property to the buyer, due to fulfilment of a promise, but the property should be given that has the conditions of the subject of contract. It is a concept that is true for every individual and its instincts are plenty in observed conditions, such as wheat and rice. If the object is a whole or general, its material, amount and specification should be stipulated in the contract, otherwise the contract is void. In this regard, clause 351 stipulates: It is inferred in conflicting the above clause that if the specification of the object of sale is not mentioned in the contract, it shall be invalid. Section 4: Definition of International Transaction Definition of the mentioned concept determines the concept of international transaction, according to the following discussions, and helps identify its nature. Thus, we primarily consider the literal notion and then the colloquial notion of the word. The Literal Concept of International Transaction Literally, international sale means buying and selling. Transaction between buyers and sellers, who are busy in trades, in international level is called international transaction. (R. Eskini, Subjects in international transaction laws, Danesh Emrouz publication, Tehran, 1992). The Colloquial Concept of International Transaction In legal terms, buying and selling goods in international level is called international transaction (R. Eskini, Subjects in international transaction laws, Danesh Emrouz publication, Tehran, 1992). The unified law of international transaction 1964 considered three regulations for international transaction: Transfer of properties from a country to another, occurrence of requiring and accepting in two different countries, and different countries for commercial activities of buyers and sellers. The third regulation was accepted in international transaction convention1980. Hence, international transaction convention has accepted a personal criterion for distinguishing international and domestic transactions. According to determination of the convention, it is not necessary for the object of sale to be transferred from a country to another, or the requiring and acceptance to be done in two different countries, but it is only necessary for the commercial place of the seller and the buyer to be in two different countries. In this respect, in most cases the goods are delivered from a country to another, and there is no need to add such a condition (S.H. Safaei, International transaction rights, Tehran University Press, 2011). Chapter 2 Reciprocal Obligation in Contracts The answer to our questions, such as: Is there any special considerations in despoiling regulation about the object of sale or does it include the price? or Could it be generalized to other reciprocal obligations?, depends on making decisions about the base, and it depends on what we could consider the basis. If we consider the basis to be the prophetic narratives, generalizing it to price and other reciprocal obligations is recusant, but if our basis is the structure considered by the wise people, the base is extended and can be generalized for the price or other reciprocal obligations. Section 1: Documents Regarding Despoiling of the Object of Sale Indication of narratives is stipulated on the basis, and cannot not be argued. Sheikh Ansari and Allameh Helli (Ayatollah Khomeini, Al-Bay, Dar-Al Ketab Al-elmieh, 1390H.) explicitly claimed unanimity. However, Sheikh Ansari considers this unanimity delighted and with successive austerity, and apparently, 182

5 Studies in Social Sciences and Humanities there is no conflict in the matter, and all the jurisprudents agree on that. In this regard, minor promises are accepted, but major ones are not, since unanimity is a document that has no dependent values religiously, due to considering the narratives. It can generally be said that all the legislative systems in the world, and even the Anglo-Saxon legislators, have agreed with the basis that despoiling the object of sale before seizure is the seller s responsibility. Section 2: Reciprocal Obligation Undertaken by the Third Party The third party pays the price that the seller should return to the customer, since it was unlawful or illegal. If the price is for a person, clearly there would be no possibility to be paid by the third party, since the seller should return what he has got from the customer by cancellation of the transaction contract. Because the object belongs to a person, the payment obligation of the seller shall never be waived. Thus, payment by the third party is not considered as the return for the personal money related to the contract. In case we want the real price to be paid, no other way is possible except by the seller. According to the above points, it should be said that it is possible for transferring the obligation in case of the third party s consent. Reciprocal obligation is also a liability undertaken by the seller. So, like other liabilities, it can be transferred by the third party (Ayatollah Khomeini, Al-Bay, Dar-Al Ketab Al-elmieh, 1390H.). Section 3: Transaction Contract in International Transaction Convension Ever-increasing development of global trade and the requirements of countries to respond to new conditions, due to expanding legal relations for an international element has moved the global community towards compilation of integrated regulations that provide speed, facilities and development of international commercial relations. In addition to having all the familiar specifications in domestic contracts and transactions, international transaction contracts have the specificity that their parties are in different countries. In addition to the different trading place of the transacting parties, handing over the object of sale in a country other than the country of the buyer s activities can be another feature of international trade, which itself cause special provisions in the relations regarding international transactions, as opposed to domestic transactions. In global transactions, the parties have little information about the credits and sureties about each other. The worries of each party about the deficiencies or avoidance of the other party in doing the undertakings, i.e. delivering the object of sale by the seller and avoiding paying the liabilities by the buyer have made foreseeing of special tools in assuring the other party to be necessary. Moreover, the factor of transportation from the origin to the destination (from seller to the buyer) in international trade is so important and the type of concluded contract between the parties depends, to a great extent, to the transportation means predicted in the contract. The possible risks during the transferring route of the goods that threaten the subject of transaction have taken the matter of covering the risks by insurance policies into consideration. The extraterritorial nature of these transactions and guaranteeing them with regards to one or more international elements has revealed the inefficiency of the national laws in responding to the requirements of international transactions. On the other hand, the inequality of the contract parties for international trades that may be the legal or political representatives of different systems has made the tendency towards concluding the contracts to be unjust, even with using appropriate care in preparing them, for solving the problems due to complicated contracts. 2. The Domain of Base Reciprocal Obligation and Its Nature Chapter 1: Theoretical and Practical Discussions Interfaces between them According to clause 387 of the civil law, despoil of the object of sale before delivery is the responsibility of the seller. However, the subject of despoiling the price before handing over is neglected in the civil law. It is uncertain whether clause 387 could be executed for the price or not! Moreover, there is no 183

6 S. A. Sharhani stipulation in the law whether despoiling in other case uses clause 387, or this regulation for the despoiling of the object of sale before delivery is only allocated to the transaction! Section 1: Reciprocating Contracts In this chapter, we explain, in two sections, about reciprocating contracts, the domain of the base reciprocating obligations and nature of the subject. We shall deal in analyzing equivalent contracts with reciprocating or exchanging contracts in section 1, and analyze the basis and nature of the subject in section 2. Equivalent Contracts with Reciprocating Contracts The subject of this section is analysis of the contracts that are in some ways similar to reciprocating contracts, but they are not among them. They are neither originally exchanging, nor their reciprocation is not among the principles of those contracts, such as debt contracts, in which a property is exchanged with its equivalent object, and not with other properties, and the exchange donation, in which the exchange is conditional. Moreover, the causality relation may not exist between the two exchanging objects, like specific marriage potion in marriage. Despoil of Property Subject to Debt Clause 649 of the civil law states that: If the property subjected to debt is damaged or spoiled after delivery, it is the responsibility of the borrower. Despoiling the Property of the Donating Body in Reciprocating Donation According to clause 795 of the civil law, donation is a contract with free of charge, and the donator donates as charity. Clause 801 of the civil law states: Donation may be on exchange and the donator can thence ask free property or free legitimate action. Despoiling the Specific Marriage Portion in Marriage According to clause 1084 of the civil law: When the marriage portion is not definite and proper, and it was found that the portion was damaged before marriage, or damaged and spoiled after marriage before delivery, the husband shall be responsible for it. Despoiling One of the Two Exchanged Parts on Breakup and Dissolution Breakup is by the consent of contract parties on dissolution and the relevant effects in future (N. Katousian, Legal actions, Tehran University Press, 1994). However, the effect of breakup is not limited to cancellation of the contract, and it may change the effects of the contract, returning the ownership. The requirement of return of ownership is starting a new ownership. It has made some specialized people to consider breakup as transaction. Related Points to Transaction Contract Despoiling one of the two exchanging items, like a material to be seen before buying, lease to own and right of preemption, is somehow related to transaction contract, without considering the despoil of the exchanges to be related to the transaction contract. The object of sale is given to the buyer in the case of buying the material after seeing it, to see it, buy it in case of liking it, or otherwise return the object. Despoil of the Object of Sale in the Case of Seeing the Material before Buying It is referred to the material that the seller gives to the buyer for him to buy it in case of liking it. Giving the object of sale by the seller to the customer is followed by a unilateral promise for the transaction, and the customer should decide whether to accept the transaction and pay for it or return the object to the seller. 184

7 Studies in Social Sciences and Humanities According to clause 631 of the civil law, when a person holds the property of others as deposited, and the regulations consider him as a trustee, it is regarded as a trust. Some lawyers say that since the civil law has not considered the receiver as a trustee, then he/she shall be responsible for the despoiling and damages to the property (S.S. Emami, Civil rights ). Despoil of the Object of Sale in the Lease to Own Clause 1 of the act ratified Nov by Money and Credit Council states: Lease to own is a rental contract with the condition that the lessee shall own the property by the end of leasing period, in case of observing the conditions stated in the contract. Clause 13 of this act has considered the contract as the location (rental contract), and regarded the ownership by the lessee the condition for the location, in case of observing all the obligations. However, the juridical experts say that the common intention of both parties in lease to own is transacting, but a transaction that ownership depends on paying required price completely (S.S. Emami, Civil rights ). Despoil of Preemption Although the complete despoiling of the property is less frequent, due to immovable state of it. However, the despoiling of the property that the preemptor possess due to the right of preemption is not an impossible hypothesis: Events such as earthquake, fire or tides could cause the complete despoil of immovable properties (N. Katousian, Unilateral obligation, Tehran University Press). Hypothesis 1: Despoil of Preemption Material Held by the Buyer Clause 818 of the civil law states: the customer is not responsible for the problems and despoils, when he/she has the material before preemption and after it, in case of no oppressions or wastage. Hypothesis 2: Despoil of Preemption Material Held by the Seller Normally, the contract is cancelled by despoil of the object of sale before handing over, and the price should be returned to the buyer. The right of preemption of the other partner before handing over the object of sale does not provide specific transformation in the relations between the buyer and the seller, for despoiling of the material to be undertaken by the preemptor. By the right of preemption, ownership of the object of sale is transferred to the preemptor, but this transfer does not cause despoiling obligation that according to the law is undertaken by the seller, to be transferred to the preemptor. The experts have given two viewpoints about the effect of despoiling the transaction on the right of preemption. According to which despoil of the object of sale causes the cancellation of the right of preemption (S.H. Emami, Civil rights, Eslami publication, 1993), and regarding the other viewpoint, despoil of the object of sale after receiving the rights for preemption cannot be the cause of dissolution of the rights. The right of preemption is created by the contract and by applying that the ownership is transferred to the preemptor. Moreover, ownership is destructed by despoiling the object of sale (N.Katousian, iqaa ). Since the basis for the rights or the fees of preemption is contractual, and if the right of preemption is properly applied, it should be accepted that despoil of the object of sale does not cancel the rights of preemption, but it prevents the ownership as the result of applying the rights to be fixed. Hypothesis 3: Despoil of the Price Held by the Buyer Despoil of the definite and specified price before receiving the fees for preemption and cancelling the contract cancels the rights of preemption, since receiving the preemption prevents any repossessions by the buyer or the seller in future. By considering the past, the forcible dissolution of the contract cannot be unaffected, especially since by the forcible cancellation of transaction and returning the object of sale to the seller, the basis for the rights of preemption, i.e. the loss that may affect the other partners, is destructed. 185

8 Section 2: Basis and the Nature of the Matter S. A. Sharhani Clause 362 of the civil law states: The efficacies of the proper transaction are as follows: 1- Immediately after the transaction takes place, the customer shall be the owner of the object of sale or property and the seller shall own the price of it 2- A transaction contract make the seller to provide documents for selling the object of sale and the customer to acknowledge the price 3- A transaction obliges the seller to hand over the object of sale 4- A transaction obliges the buyer to pay the price Transfer of ownership and obligation of the parties to hand over the exchanging items are the effects of proper transaction. But, the documents regarding the object of sale and the price may not be the reason for proper transaction (N.Katousian, iqaa ). Clauses indicate that the only instinct for documenting the security for third party ownership in our rights is about the object of sale. Since the ownership of the object by a third party may degrade the transaction, the documented security may not be the reason for proper transaction. It is stipulated in clause 391 of the civil law that in case it is proved that whole or a part of the object of sale belongs to a third party, in returning, the seller should return the price. Obligation of the seller to return the price may indicate that the documenting obligation is a reciprocal obligation, but it is not a right perception, since problematic transaction has no effects on possession, and cancellations due to problematic transaction considers the interests of the seizure. The last part of clause 391 has stepped beyond that and states: Basis of the Contract It is made by the agreement of two parties and it is the consent for mutual obligations: a nondecomposable set that nothing can disintegrate it (N. Katousian, Legal actions, Tehran University Press, 1994). Correlation of two exchanging parts created by concluding a contract continues up to the time of hand over and may sometimes remain after the handover. The reciprocating justice require that the two exchanging parts not to be on one side, and if a party could not undertake its obligations, the other side is exempted from his undertakings, too (N. Katousian, Specified contracts ), since the reason for one side undertaking is the executing liabilities of the other Party. According to clause 362 of the civil law, one point in proper transaction is transferring the ownership, and immediately after occurrence, the contract is commenced. The other point in transaction contracts is the obligation to hand over the object of sale and paying the prices. In other words, it requires specific payments for the received object of sale. It is an undertaking to be executed for the responsibility of payment to be on the other side. Therefore, it can be concluded that despite transfer of ownership, a contract is the basis for obligations for the hand-over. The domination of the buyer on the object of sale is occurred when the undertakings are done, which is due to handing-over and not the contract. Nature of the Matter- Directive or Complementary o The Role of will and Determination If the reciprocal obligation is complementary, the two sides creating it could agree that the obligation for the object of sale is transferred by transferring the ownership to the buyer, or remain at seller s disposal after the hand-over, not to be transferred to the customer. But, if it is not complementary, the agreement opposed to that may not be possible. In Imamieh Sect, reciprocal obligation is the demand by religion, and cancellation of the contract, which is as a result of despoiling the object of sale before seizure, is forcible. 186

9 Studies in Social Sciences and Humanities It is stated in article 6 of international transaction agreement ratified in Apr in Vienna that the contract parties can determine the conditions for transferring the obligations in consent. If the parties common will about transferring the obligation or security is stated explicitly in the contract, the will shall dominate the relations, but if it is not notified, their implicit will can be executed. For instance, if the parties used the sample forms for concluding the contract, their implicit will could be determined. Most of our juridical experts have stated that reciprocal obligation is a complementary aspect. The parties can place the responsibility of despoil of the object of sale before handing over on the customer, as in contradiction with the contents of clause 387 of the civil law. Moreover, they should agree that in case the object of sale is despoiled, the customer should pay the whole or part of the price to the seller (N. Katousian, Specified contracts; S.H. Safaei, Civil rights ). Chapter 2: The Importance of Delivery and Aspects of Segregation Provision of obligation is the result of contracts, and its transfer is the result of delivery. The obligation by the seller is transferred by delivery and transaction is terminated. Nevertheless, in the laws of some countries, transferring of obligation and security is verified by making a contract, and delivery has no roles in transferring the obligation. In Hague convention dated Jul about international transaction of objects (article 97), the time of delivery is accepted as the origin of transferring the obligation, and according to articles of Vienna Convention (1980) that has replaced Hague Convention, the most important result created by delivery is transferring the obligation. Section 1: Nature, Basis and Conditions of Delivery (handover) The nature and basis of delivery: According to clause 367 of the civil law, Delivery or hand over is giving the object of sale to the customer, in such a way to possess it, and seizure is domination of the customer on the object of sale. Obligation to deliver the object of sale and the price has been considered in clause 362 of the civil law along with transferring the ownership, and it is not regarded as the effect resulted in ownership. Thus, undertaking delivery is among the contents of contracts. If the seller does not observe this undertaking, the contract shall be terminated, if one of the two exchanging items is despoiled, since it makes execution of the contract impossible. This termination is forcible. Verification of the Contract Transaction contract has two effects: transfer of the ownership and obligation to deliver the object of sale and the price. However, the order of these effects on contracts depends on the verification of the contract. Clause 365 states: Corrupt transaction has no effect on possession. Clause 333 of the civil law also states that when a person takes hold of a property by corrupt transaction, he should return it to its owner, and in case it is despoiled, he shall be responsible for the object and its relevant interests and benefits. (Sheikh Ansari, Makaseb ) Domination on Delivery is the Condition for Verification of the Contract In contracts, delivering the case of transaction may rarely be the condition for execution of contract. Nevertheless, in contracts such as free contracts, endowments and transaction of gold and silver, in which seizure or taking hold of is the condition of verification (clauses: 59, 364, 772, 789 of the civil law). If the object of sale has no potential to be taken hold of, the contract shall be void (e.g. mortgaging debts and benefits) (clause 774). 187

10 Ability of possessing and Benefitting by the Buyer S. A. Sharhani The seller should give the object of sale to the buyer in such a way for him to dominate benefits (clause 367 of the civil law). Thus, if the object is given to the buyer, but there is no possibility of possess it as desired, it can be said that the delivery is not performed properly. The regulations are common about the information and specifications to be notified to the buyer about the sold object. Clause 369 in this regard can be referred to: Delivery has different aspects. However, it should be in such a way to be commonly referred as delivery or handover. Delivery Time and Place If the time of delivery is defined in the contract, the seller should deliver the object of sale on due time. No determination of the time of delivery in the contract usually indicates its urgency. However, the urgency is not in contradiction with giving time to preparation, packing and delivery to the seller (Clause 344 of the civil law). The main point is to deliver the object of sale immediately after concluding the contract, unless the parties decide on a particular date and time for it (Clause 341 of the civil law), or a specific time is considered for its delivery, or the nature of it indicates consideration of the required time for it. Section 2: Role of delivery on transferring the obligation In our law, transaction is a contract for possession, and ownership is transferred immediately after concluding the contract, but the law in some countries indicates that ownership is not transferred by concluding contracts, and transferred by delivery. Moreover, while in our law transferring the obligation is due to delivery, in some countries transferring the obligation provides the contact. Hence, it can be said that there are two methods in different legal systems for transferring the obligation: First method: The method by which obligation is transferred due to contract. In this case, delivery has no roles in transfer of obligation. Second method: The method by which obligation is transferred due to delivery. Thus, delivery has a main role in transfer of obligation. The Hypothesis that Transfer of Ownership and Obligation are by Concluding Contracts In the method in which transfer of ownership and obligation are by concluding contracts, if the object of sale is despoiled after the contract, it shall be the responsibility of the buyer, i.e. the owner, and the seller shall have no responsibility in that respect. The buyer should pay the price, even if he could not receive the object of sale. The responsibility of the obligations by the owner is accepted in English and French laws, and it is also accepted in Islamic religion by Malili and Hanbali Sects. The Hypothesis that Transfer of Obligation is by Concluding Contracts, but Transfer of Ownership is by Delivery When the obligation is transferred by concluding a contract, if the ownership is transferred contractually and not by delivery, the result shall be astonishing, since the obligation shall be the responsibility of the person who is not yet the owner. This method is admitted in Switzerland, giving the responsibility of obligations or liabilities, due to the contract, to the buyer. Clause 184 of that law in defining the contract states: Transaction is a contract by which the seller is undertaken to deliver the object of sale and transfer of ownership to the buyer, in return to the price that the buyer is responsible to pay. Thus, transaction in Swiss laws is a pledging contract, and transfer of ownership is the result by delivery (Refer to articles of the Swiss civil laws). 188

11 3. Reciprocal Obligation in Contracts Chapter 1: In Contract of Transaction Studies in Social Sciences and Humanities According to clause 387 of the civil law, if the object of sale is despoiled before delivery, the transaction shall be cancelled, and the price should be returned to the customer. But, no stipulation is made in that clause to the sellers obligation or reciprocating obligations. Our law experts call the obligations to be undertaken by the seller according to this clause, as reciprocal obligation. Since the subject of clause 387 is obligation of the seller in case of despoiling the object of sale, it is also called obligation for despoiling. The obligation of seller for the despoiling of the object of sale before receiving and despoiling of the object of sale in an optional time are discussed in religion. However, little description is given about reciprocation the sellers obligation and its features. Section 1: In Iranian Civil Law No stipulation is made in clause 387 of the civil law about transfer of obligation, but the title of the 4 th chapter of 1980 Vienna Convention is transfer of obligations. The nature of reciprocal contracts is in its possession, indicating that each party should deliver what has been considered as the property of the other party. This undertaking has exchanges and the other party is obliged to give the exchange for his obligation. By the deliveries of both sides, the obligation is transferred to the other party and shall be his responsibility. But, as mentioned earlier, the despoiled obligation is the continuation of undertaking for delivery, and if the seller could not deliver the object of sale due to despoiling, he should return the price. Section 2: Reciprocal Obligation in Contracts Contracts are not a combination of independent iqaa (a legal action done by the decision of only one person). It is the consent, which relates everything to another thing. It can be said that the two sides connect or create sets of mutual obligations. Within this complex set, the obligations of both sides would be defined separately, thus not being dissoluble from then on. But, the intentional links of obligations have potentials that they will itself cannot depart them from each other, though they are considered with great care. For instance, the nature of each exchange indicates transformation, displacement and transfer of ownership. The contract should not be in such a case that the exchanged parts be on one side of the contract to take what is on credit and not to pay what is in debt. The reciprocal justice is demolished in such a transaction, and what happens is in contradiction with the aims of both parties. The point to be consider is the necessity for mutual exchange. In these contracts, a principle is superior to will that is acquired within the frame of parties consents. Thus, the condition that is opposing the agreement shall void the principle of consent. On the other hand, correlation between the exchanges that enters in the common intention of the parties, concluding the contract due to having access to them does not require the time of consent. In executing their obligations, the two parties think and consider concluding the contract as the introductory to their final aims. For instance, in transaction, the main motivation is getting the mutual exchange, and the contract related to possession and ownership is an introductory to reaching the final aim. The buyer does not pay in order to get private or official documents of the transaction, or only virtually be the owner of the object of sale. He wants to have financial domination on the object of sale, and get benefits out of it. Section 3: Legal basis for Reciprocal Obligation In Shiite regulation, which the Iranian civil law has pursued, reciprocal obligation of the seller due to despoiling the object of sale before delivery to the customer is regarded on the basis of the following reasons: Narratives There is a well-known prophetic narrative stating that if any object of sale before delivering to the customer is despoiled, that object belongs to the seller. 189

12 Documented Unanimity S. A. Sharhani In addition to the above narrative, many jurisprudents consider unanimity as the documented reciprocal obligation of the buyer, but unanimity cannot be accepted independently, since the value regarding documented unanimity is related to the viewpoints of Shiite Imams, and such expectation is where no other proofs exist in that respect. Section 4: Reciprocal Obligation in International Transaction Definition of international transaction: it is a transaction between buyers and sellers, occupied in trade activities, in international levels. Selling and buying goods in international level is called international transaction (R. Eskini, Subjects in international trade rights ). a) Technical and Legal Differences of Domestic and International Transaction Some lawyers believe that there no significant difference between domestic and international transactions. According to them, the only considerable difference between the two is that there is an external element exists in international transaction, which cannot be found in domestic transaction. This external element causes in the stages of solving the disputes due to international transactions, the arbitrator or judge rely on the conflicting law systems. b) Existing Hindrances for General Application of 1980 Vienna Convention 1- Despite obtained developments, one of the serious hindrances for applying Vienna Convention is proper interpretation of the convention. This problem is due to differences in designing the convention with many of the domestic legislations. 2- In contrast to domestic regulations that are parts in completing a legal system, Vienna Convention does not have legal aspects for interpretations, i.e. there are not any regulations in the convention that could have interpretations in case of problems. Thus, in ambiguities or real vague matters, two solutions could be applied: First solution: Refer to the criteria and principles derived from domestic laws Second solution: Find the solution within the Convention, itself c) The Domain and Inclusions of International Transaction Convention According to article 1 of the Convention, Vienna Convention supervises transaction contracts of goods. The parties of the contract should be the ones with different countries of trade. Moreover, the countries that are the places for commerce between the transaction parties should include one of the two following conditions: Condition 1: The considered country should be among the allied countries Condition 2: Observing international laws, leading to application of the laws in one of the allied countries Chapter 2: The Effect of Violating the Contract by the Seller Violation of the contract does not always occur by the customers. Mostly, it is the seller that benefits from not executing the contract. Thus, it should be seen that if the seller infringes the contract and does not fulfil the undertakings, what rights the customer might acquire against the intentional violation. Article 70 of the Convention stipulates that if the seller has violated the contract, articles 67, 68 and 69 shall not damage the compensation manners that the buyers can follow in violation of the contract by the seller (N. Katousian, Legal actions ). 190

13 Studies in Social Sciences and Humanities Section 1: History of Enacting Article 70 of Vienna Convention The history of this article can be found in item2 of article 97 of the uniform law of international transaction. However, reprogramming for the systems regarding compensation and transfer of obligation led to a new plan of this article. The modifications and explanations in Vienna Convention had no changes in the above article, and it only indicated literal and stylistic changing features. Section 2: Concept of article 70 of Vienna Convention The effect that violating the contract by the buyer could have on reciprocal obligation transfer was analyzed in article 69. Article 70 analyzes the effect of violation of the contract by the seller on reciprocal and legal obligation transfer that is acquired by the customer. 4. Conclusion The specific place among specified contracts has caused many general regulations of contracts to be considered in transaction. The question about reciprocal obligation is concerned with the general regulations is whether according to normal conditions it is considered in the transaction contract or its consideration is due to its exceptional state. The legal experts have no unified viewpoints about the generality of this basis, but the dominating view is based on its generality (N. Katousian, Legal actions ). Induction in other specified contracts and similar subjects showed that creation and transferring reciprocal obligation are similar to transaction contract, only in exchange contracts, i.e. in rental contracts, farmletting and sharecropping. Thus, it shall be fine to analyze the similarities in brief. Leasing, like transaction, is a possessing contract and the ownership of interests is transferred by the contract. Since leasing is continuous contract and using the benefits is gradual, legal experts have interpreted ownership transfer in it as ownership of benefitting capabilities (N. Katousian, Specified contracts). In transaction, the subject of undertaking is delivery of specified exchange, but in leasing, what the owner should deliver is interests, which is not possible unless by delivering the object that is considered as the interests. Therefore, the undertaking assigned to the lessor in the civil law is delivering the object of rent: By taking hold of the interests, the lessee is dominating and can use the property. In contrast, if no violation has occurred, the lessee is obliged to pay all the rental fee all at once (Clause 490 of the civil law). It can generally be said that like transaction, creating obligation in leasing is due to contract, and transfer is done by delivery. It does not make any difference for us to believe in its gradual behavior about the delivery of interests, or if we consider the delivery of subject as delivery of interests. Obligation in farmletting and sharecropping could not be considered as reciprocal obligation. Thus, it can be concluded that: Generalizing the aspect of reciprocal obligation is only thought to be for leasing, and the obligation in other contracts is not reciprocal. Obligation of the seller in despoiling the object in an optional state is continuing the obligation that used to exist before delivery and it is not independent of it. In other words, transfer of obligation by delivery depends on the customer not to have any options. Otherwise, as the despoiling of the object before delivery is undertaken by the seller, the seller s option is undertaken by him up to the expiry conditions. Seller s obligation in despoiling the object at the customer s option time is the continuation of the obligation that was undertaken by him before the delivery. Hence, expiry of the option time is supplementary to delivery, and not independent of it. In other words, delivery is causing the obligation transfer, when the customer has no options. In case the customer has got the option, delivery is not adequate for transferring the obligation, but it depends when the option is expired. 1) Exceptional order, 2) The despoiling or the damage is related to after the delivery 3) The object should be a specified object 4) Option should only be assigned to the customer 191