Increase of Contractual Liability: Responding to Intentional Breach of Contract

Document Type : Research Paper

Authors

1 professor of university of qom

2 Private Law, Law faculty, Qom university, Qom, Iran

Abstract

Breach of contract, a fundamental concept in legal systems worldwide, leads to the obligor's contractual liability. This liability obliges them to compensate the obligee for losses incurred due to the breach. Whether the breach is intentional or unintentional, it raises complex questions about the extent of the obligor's responsibility and the compensatory measures available to the injured party. This research delves into the intricate nuances of intentional breach of contract, exploring the relationship between intentional breach, foreseeability of damages, and the intensification of contractual liability.
In legal systems globally, the principle of full compensation prevails, emphasizing the obligor's obligation to compensate all losses caused by the breach. However, exceptions exist, such as the non-claimability of damages that were not reasonably foreseeable at the time of contract formation. This exception raises questions about the compensatory rights of the injured party and the moral and ethical implications of intentional wrongdoing.
Intentional breach of contract represents the most severe form of breach, occurring when the obligor refrains from fulfilling the contract with the intention of gaining undue benefits, avoiding losses, or causing harm to the obligee. This deliberate action raises profound legal and ethical questions.
Does the intentional nature of the breach warrant an intensified response in terms of contractual liability and compensatory measures?
The hypothesis of this research asserts that intentional breach signifies bad faith, justifying a heightened response. Ethically, intentional wrongdoing deserves a more significant degree of accountability compared to unintentional actions. This moral principle aligns with established legal doctrines, custom, reason, and the wisdom of jurisprudence. When a person intentionally commits an abnormal act, their actions should be treated differently from those of an unintentional person. In the context of contractual liability, this differentiation translates into an intensified liability for intentional breaches.
To validate this proposition, the research employs a descriptive-analytical approach coupled with a comparative study of legal systems, including French law, international legal documents (PECL, DCFR, and CESL), Iranian law, and jurisprudential foundations. By meticulously examining these legal frameworks, the research investigates whether intentional breach of contract justifies claiming unforeseeable damages, a right typically restricted in cases of unintentional breaches.
The findings of the research demonstrate that intentional breach of contract results in an escalation of the obligor's contractual liability. In situations of intentional breach, the injured party can claim unforeseeable damages that would otherwise be unclaimable in cases of normal, unintentional breaches. This legal possibility is unequivocally recognized in various legal systems, including Article 1231-3 of the New French Civil Code, Article III.3:703 DCFR, and Article 9:503 PECL. While the principle of foreseeability of damages generally serves as an exception to the principle of full compensation, intentional breach of contract transcends this limitation. Consequently, the injured party in cases of intentional breach is entitled to claim unforeseeable damages, thus reviving the principle of full compensation.
Furthermore, the ability to claim unforeseeable damages in cases of intentional breach underscores the multifaceted nature of contractual liability. Beyond its primary function of compensating damages arising from breach of contract, contractual liability assumes secondary roles, such as punishment and deterrence. It serves as a form of private punishment, discouraging intentional misconduct and promoting ethical behavior in contractual relationships.
In the realm of Iranian law and Imamyah jurisprudence, while there may be no explicit and universal rule permitting additional damages for intentional breach, specific legal and jurisprudential branches exist where intentional misconduct heightens liability. By adopting the criteria of these branches, it becomes evident that intensifying liability for intentional breaches harmonizes with jurisprudence and legal foundations, thereby ensuring a just and equitable legal response to intentional wrongdoing.
In conclusion, the research establishes a compelling argument for the intensification of contractual liability in cases of intentional breach of contract. By recognizing the distinctive nature of intentional breaches and the moral principles that underpin legal doctrines, legal systems can uphold justice, accountability, and fairness in contractual relationships. The ability to claim unforeseeable damages in cases of intentional breach not only ensures full compensation for the injured party but also serves as a powerful deterrent against intentional misconduct, reinforcing the integrity of contractual agreements and promoting ethical conduct in the realm of commerce and law.

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Journal of Legal Studies
Volume 15, Issue 4 - Serial Number 50
December 2023
Pages 397-438

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