A Comparative Analysis of Case Law Concerning Valuation of Monetary Debts after Their Maturity

Document Type : Research Paper

Authors

1 Prof. of Faculty of Law & Political Science at UT, Tehran, Iran

2 PhD Student in Private Law at UT, Tehran, Iran

3 . PhD Student in Private Law at UT, Tehran, Iran

Abstract

Introduction
From maturity until extinction, monetary debts do not remain fixed. There is a possibility that they may increase in quantum and impose themselves on the debtor as a result of the intervening evolutions. The debtor, on the other hand, is unlikely to agree to any change in the quantum of the debt, and this may lead to a dispute between the creditor and the debtor. The first question that the authors face in the article is what are the possible causes of changing the quantum of an outstanding debt from its maturity date to its payment date? In response to this question, the first thing to note is the decrease in the value of money. The decrease in value of money is objective in certain instances thus is based on the official inflation rate announced by the Central Bank of Iran, and is subjective in other cases thus depending on the specific transaction. In this regard, failure to pay the debt upon maturity can lead to problems for the creditor who will expect to receive the money at that time, including having to compensate third parties. In addition to this, he was deprived of the benefit that he would have gained had he received the money in a timely manner.




 




Therefore, failure to pay a debt on time will result in, in addition to the decrease in value of money, other types of damages such as actual losses suffered, loss of profits and gains lost, each of which should be analyzed separately. However, the parties will normally attempt to agree in advance on the amount of damages resulting from non-payment of debts. It is, however, important to note that depending on whether this agreement concerns the decrease in value of money, actual losses suffered, or profits not realized, different implications will result, which should be assessed separately. Consequently, in this article, after discussing objective and subjective methods of compensation of decrease in value of money, damages and loss of profits resulting from failure to pay debts, as well as the taxonomy of the agreements relating to such damages, the combining of these various damages is examined in the final section.
 
Methods
Using the library resources, this article uses a comparative approach and an analytical-descriptive approach in accordance with Iranian and Common Law case law.
 
Results
It is the main objective of this article to identify the accessories of monetary debts, including subjective and objective compensation for the decrease in value of money, actual losses and lost profits. This is because under Iranian law, all of the above headings of damages are considered to subsume under the notion of late payment damages (“khesāratē-ta’khirē-ta’diyē”). As the authors of this article address in their article, the principal concern is how and by what method debts are calculated and evaluated after maturity? As a response to this question, the authors differentiate various types of accessories related to monetary debts after their maturity. A second question to consider is the limits that apply to parties' agreement regarding each of these types of accessories and also the possibly of claiming for all of said accessories in a specific case. It is the thesis of this article that an agreement on each of these accessories is valid and that, by separating them from each other, it is possible to claim for all of them simultaneously.
 
Conclusions
As a result of various factors, it is possible for the amount of a debt to change after maturity date. Thus, if staggering inflation has occurred, the first step should be to revaluate the monetary debt in accordance with the rate determined by the Central Bank of Iran. However, if the parties' intention concerns subject of a specific commercial transaction, the decrease in value should be compensated according to the inflation in value of said subject, instead of the CBI's rate. In addition, damages incurred and lost profits due to a delay in payment of the debt after the maturity date should also be evaluated using objective and subjective criteria.

Keywords

Main Subjects

References

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 Cases
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