MODULATION AND ANALYSIS OF PENALTY CLAUSE IN IRAN'S LAW AND JURISPRUDENCE

According to the principle of contracts freedom, the principle of autonomy requires that the contract's parties can conclude the contract in any way they wish. And in this way they are not obliged to choose the prefabricated forms in conditions, works, as well as the guarantee of the performance of the contracts. And they can include any condition which they would in accordance with (Article 10 of the Iran Civil Code): Provided that it does not be against the law or contrary to the nature of the contract. One of these conditions, which the parties are inserted while contracting with the aim of ensuring the implementation of commitments, is penalty clause condition which is of great importance in jurisprudence and law of Iran. According to research conducted and the fact that the nature of penalty clause is damages in Iran's law and jurisprudence, as well as the question that whether modification possibility of penalty clause exists in Iranian law and jurisprudence or not, it should be said: Contrary to the jurisprudence's views, referring to negation of intolerable hardship rule (Osr Va Haraj) and modification possibility of penalty clause, Iran's legislative policy is in line with the French law in favor of the prohibition on penalty clause's modification. And the fact that whether there is possibility of damages excessive to the penalty clause in Iran's law or not, is not possible in the law of Iran due to the research conducted and it is possible in jurisprudence.