An Examination of Reliance Damages in Iranian Jurisprudence (Fiqh) and Law

Abstract

The term “reliance damages” originates from common law and was first introduced in a seminal article by Fuller and Perdue. According to Fuller’s classification, contracting parties may hold three distinct interests: the reliance interest, the expectation interest, and the restitution interest. In the event of a contractual breach, each party is entitled to claim compensation corresponding to any of these interests. Since this classification encompasses the full compensation of damages incurred by the plaintiff as a result of a breach, the differentiation of these interests can bring about a significant development in contract law and its mechanisms of redress.

This article, employing an analytical method and by reference to both jurisprudential and legal sources in comparison with common law, argues that although Iranian jurisprudence and law may not explicitly recognize the notion of reliance damages, certain principles such as Qa‘idat La Zarar (principle of no harm), Qa‘idat Tasbib (principle of causation), and Qa‘idat Ghurur (principle of inducement or deception), along with jurisprudential and legal institutions such as Khiyar Tadlis (voidability due to misrepresentation) and Khiyar Takhalof Sharṭ (rescission for breach of condition), provide a doctrinal foundation. Moreover, within Iran’s codified law—particularly Articles 263, 390, and 391 of the Civil Code and Article 1 of the Civil Liability Act (Qanun-e Mas’uliyyat-e Madani)—a legal basis can be inferred for recognizing and claiming compensation for this type of damage.