Examining the Role of the Principle of Equity in Resolving Contractual Disputes in the Legal Systems of Iran and England

Abstract

The principle of equity, as one of the fundamental doctrines within various legal systems, plays a significant role in ensuring substantive justice and compensating for deficiencies arising from the rigid interpretation of legal rules. In the legal system of England, equity has long developed as an independent body alongside common law, providing mechanisms such as specific performance, injunctions, equitable rescission and rectification of contracts, and remedies for non-pecuniary damages to resolve contractual disputes. In contrast, in Iranian law, although there is no explicitly independent doctrinal foundation under the title of “equity,” concepts such as justice, Islamic jurisprudential rules including the no-harm rule (la darar) and benevolence (ihsan), the principle of good faith, and the broad discretionary powers of judges in interpreting contracts and adjusting obligations perform functions analogous to equity. This study aims to comparatively examine the function of the principle of equity in the legal systems of Iran and England. It first explores the historical and philosophical nature of equity and its role in resolving contractual disputes, and then analyzes the capacities and challenges associated with its application in both systems. The findings indicate that English law, due to its dual structure of common law and equity, provides more coherent and institutionalized mechanisms for applying equitable principles in contractual disputes, whereas the Iranian legal system relies more heavily on general principles of justice and Islamic jurisprudential rules, with the application of equity depending on broader judicial interpretation. Ultimately, this study concludes that strengthening the position of equitable principles in Iranian law—through the development of the doctrine of good faith, the more formal recognition of institutions such as judicial adjustment of contracts, and the expansion of judicial discretion in establishing contractual balance—can enhance the efficiency of the contractual dispute resolution system and promote fairer legal practices. Furthermore, the comparative analysis demonstrates that drawing on the experience of English law in distinguishing between legal and equitable remedies may provide a suitable model for improving contractual justice in Iran. This research, by offering a comparative analysis, facilitates a more effective utilization of the concept of equity in supporting contracting parties and maintaining the stability of legal relations.