The Principle of Disclosure in the Contractual Process: A Comparative Study of European and Iranian Legal Instruments

Abstract

The aim of this study is to elucidate the principle of disclosure in the contractual process through a comparative analysis of European and Iranian legal instruments. The present research is conducted using a descriptive-analytical approach. Data collection has been carried out through library-based research by referring to documents, books, and academic articles. In the formation of major contracts, a preliminary phase occurs between the two parties, commonly referred to as the "pre-contractual period." This stage is predominantly characterized by preliminary discussions and negotiations between the parties concerning the content and terms of the future contract. During this process, the parties become aware of each other’s positions and align their perspectives in order to reach an agreement that forms the foundation of the contract. Entry into the pre-contractual period does not in itself entail an obligation to conclude a contract; however, it is governed by specific principles and regulations, the violation of which may lead to pre-contractual liability or influence the legal status of the future agreement. One of the main purposes of pre-contractual relations is the exchange of information, which enables the necessary evaluations and facilitates informed decisions regarding whether to proceed with or withdraw from the transaction. Although in significant contracts the parties typically enter negotiations after conducting prior studies and acquiring preliminary information, not all issues of interest are fully clarified. Consequently, further consultation with the other party is often required to resolve outstanding questions. Moreover, certain issues may emerge in direct interaction with the other party that were not previously foreseeable and can only be decided upon after receiving adequate information. One of the challenges faced by legal systems is the duty of disclosure during the pre-contractual period. In other words, the question arises whether the parties are obligated to disclose relevant information to one another prior to entering into a contract and whether they must inform each other of facts related to the future agreement. Alternatively, is such disclosure merely encouraged in economic relations, or is it unreasonable to expect disclosure from the other party, thus placing the burden on each party to protect their own interests and to decide on contract formation with due diligence?