Performing Contractual Monetary Obligations through Delivery of Negotiable Instruments and its Implications: The Approach of Iranian Law, Some National Systems and International Instruments

Abstract

One of the most pivotal and practical subjects of contract law is whether one may dispose of his or her contractual obligations through the issuance of negotiable documents. This article focuses on the issuance of such instruments as a cheque in the performance of monetary obligations when the issuance is dishonored. In fact, the question is whether the issuance and delivery of such instruments convert a civil law obligation into an obligation arising from the issuance of negotiable instruments or whether it is possible to rely upon the original obligation with all its guarantees and consequences. The statutes are silent on the matter. Scholars and jurisprudence are divided. This article comparatively examines various legal systems and international instruments like UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law, and by relying on the general principles enshrined in Article 3 of the Code of Civil Procedure, concludes that the better approach is the one that subscribes to the survival of the original obligations. It is hoped that this comparative study can set a model for our future legislative initiatives.

Keywords

• cheque
• contractual obligation
• guarantees
• legal principles
• novation
• unidroit principles