An Examination of the Legal Nature of Cancellation of Contract by Mutual Consent: The Approach of Iranian Contract Law

  •  Mehdi Pirhaji    
  •  Mojtaba Nikdoosti    
  •  Mohammad Eskandari- Pudeh    


A contract can be defined as 'an agreement between two or more parties, which is legally binding.' Sometimes, people regret concluding a contract, and give up continuing it and fulfilling their obligations. Where the cancellation of contract is with the mutual consent of the parties, it is called Ighale (cancellation of contract by mutual consent). Cancellation of contract by mutual consent literally means to release, but in legal terms, it means mutual consent to the dismissal of a contract and its effects. This is different from termination of contract. Cancellation of contract by mutual consent, as found in the Iranian Civil Code, has its roots in Islamic rules. It is generally a kind of contract in itself, the condition for the validity of which must be satisfied, otherwise, it may not be considered a valid one. The main pillars of cancellation of contract by mutual consent are the parties' consent and intention; the parties' capacity; the subject matter of the cancellation; and the means of showing will. Cancellation of contract by mutual consent (Ighale) is stipulated in the second clause of Article 264 of the Iranian Civil Code as a means for the discharge of obligation. The objective of this research is to examine the ambiguities associated with the concept of Ighale in Iranian Contract Law, and to suggest ways for eliminating such ambiguities in order to foster a better understanding of the concept. This is a library-based research, and the main method applied is analytic, although elements of a descriptive method are also visible.

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