Assessing the Relationship Between Fundamental Breach of Contract and Breach of Contractual Obligation under the Doctrine of Unity of the Intended Purpose in Iranian Law and the United Nations Convention on Contracts for the International Sale of Goods (CISG)

Abstract

Contracts, as the principal instruments for regulating legal relations between persons, are founded on the principles of contractual binding force and the obligation to perform contractual undertakings. Nevertheless, numerous situations arise in practice in which one party refuses to perform its contractual obligations or performs them defectively. Different legal systems provide distinct remedies depending on the seriousness and significance of the breach. In international commercial law, the United Nations Convention on Contracts for the International Sale of Goods, adopted in Vienna in 1980 (CISG), distinguishes ordinary breaches from breaches affecting the continued existence of the contract by introducing the concept of “fundamental breach” in Article 25. Under this approach, the right to avoid the contract arises only when the breach substantially deprives the aggrieved party of the benefits it was entitled to expect under the contract. Although the concept of fundamental breach has not been expressly recognized by the Iranian legislature, certain legal doctrines and remedies—including the doctrine of unity of the intended purpose, the right of termination for breach of a contractual condition, and non-conformity with the essential attributes of the subject matter—perform comparable functions. The doctrine of unity of the intended purpose is based on the premise that the performance of an obligation or the existence of a particular attribute may be so integral to the parties’ motives and contractual objectives that its absence destroys the essential purpose sought through the contract and renders its continuation futile. Employing a descriptive-analytical method and a comparative approach, the present study examines the possibility of establishing a conceptual and functional relationship between fundamental breach under the CISG and breach of contractual obligation where there is unity of the intended purpose under Iranian law. The findings indicate that, although the theoretical foundations of these two legal doctrines differ, the principal criterion in both legal systems is the frustration of the contract’s essential purpose and the deprivation of the obligee of the expected contractual benefit. Accordingly, the doctrine of unity of the intended purpose may be regarded as the Iranian domestic legal institution most closely corresponding to the concept of fundamental breach under the CISG.