Stipulation in the International Commercial Contracts

According to the principle of will power or will dominance and the principle of freedom to contract which have been manifested in the article number ten of the civ il code the will power of individuals dominates the regulations of closing a contract and its after effects and the freedom of will power here has gained the acceptance as a principle. By closing a contract by two free wills that contract becomes binding and according to the b inding principle or p rovision in contracts the sides of a contract will be committed to carry out the terms and content which is inserted in a contract unless it becomes terminated with by the volition of the sides of the contract themselves or due to a legal cause. Since according to the princip le of freedom to contract its sides can shun from closing any contract which is an obvious violation of law, due to the same reason they can also take into consideration any condition or term which isn’t an obvious violation of law and according to the principle of binding ness of contracts the sides of them and their vicars are bound to execute the conditions which are stated in it. One of the conditions of contracts which can be considered is the condition of stipulation . In the present study in addition to scratch the surface on the subject of stipulation in contracts it is expected that the theoretical aspect of the essence of stipulation gets evident, the view point o f Islamic jurisprudence and the legal proceedings become stated and the issue that stipulation is claimable under what conditions and in what manner. By carry out a comparative study we get aware of the views in several legal systems toward stipulation and also its position in the private international law and the latest changes in the domain of stipulation specifically ones which are presented at the international level.


Introduction
One of the general principles in law is the principle of keep ing the pro mise or pactasuntservanda which is known to the whole legal systems in the world.According to this princip le anyone is responsible and bound to carry out the affair that is co mmitted to do it and put it into practice and/or shun from doing anything which was committed to quit it.The violator of the mentioned principle is committed to compensate for the loss and damage out of doing or quit doing an action.According to the article number t wo hundred and twenty one of the civil code of Iran: ''If anyone promises or undertakes to do something or undertakes to shun from doing something in case of violat ion s/he is responsible for any harm which is occurred to the other side of the contracts . ''

Review of Literature
1) The essay titled as ''Regulat ion of stipulation in the Law of Iran by Akbar BarzegarSamghabadi .
2) The essay titled as ''Position of stipulation in contracts by Dr.A mir Housseinabadi.In this essay the author totally is protests against the position and the significance of the stipulation in contracts and doesn't get into discussing about the difference of this position in the internal and the international legal system.
3) The essay titled as ''the role of UNCITRAL or the Un ited Nations Co mmission on International Trade Law .

Research Goals
1) By considering various aspects of stipulation and stating the significance of this affair in a contract specifically contracts which have a transnational element, these aspects aid the legal and natural persons as the beneficiaries of an international co mmercial contract to determine a proper stipulation .
2) By presenting the views and opin ions of legal experts in this domain we are going to present some approaches in order to standardize the way of dealing with and deducing stipulation in commercial contracts at the international level.
3) By doing a comparative study of stipulation and contrasting various legal views fro m a scientific angle on stipulation in a contract compile an appropriate scientific-legal collection until sin similar situations the university students and researchers can be able to refer to it as a proper guide and source.

Research Questions
1) What is the entity of Stipulation ?
2) Does this stipulation in case of any violation of contract on behalf of the committed side is completely claimable or not?
3) Does the obligee essentially forced to prove the occurrence of the damage or harm to him/herself to be considered as deserved to receive compensation from obliger or the mere existence of the condition of paying the stipulation and accepting it fro m obliger is sufficient to oblige h im/her to co mpensate for the harm or loss ?

Research Hypotheses
1) Ths issue that whether the stipulation to punish the violator for shun from performing his/her commit ment is a kind of civil penalty which is being determined fo r him/her o r the subject that this price is to compensate for the harm which is occurred to the obligee due to the violation of commit ment deserves discussion and deliberation but for the time being in the law of Iran legal experts consider the essence of stipulation as a harm; that is the harm which has been determined in advance by the mutual consent of the sides of the contract and it is considered as a kind of harm for the non-performance of a job which the two sides have reached an agreement on the amount of it.
The article number two hundred and thirty approves of this story .
2) It seems that in case the damage which is occurred is more than the determined rate wh ich is inserted as the requirement or condition claiming for a surplus cost is impossible but in cases in which the damage is less than the determined rate wh ich is inserted in the condition we can content ourselves with this rate.
3) One of the specific cases which exists in this legal establishment is that the obliger can't shun fro m paying the accepted rate in the contract on the pretext that due to his/her breaking of the promise no harm goes for the oblige.

Stipulation from the Viewpoint of Comparati ve Law
Co mparative law is a collect ion of ru les and regulations which are not relevant to a specific relation but it is a science which scrutinizes and analyzes the legal questions and problems fro m a co mparat ive view point.
In recent years paying attention to comparative law for resolving the existing requirements at the international level specifically in the area of econo mic and co mmercial fields has augmented emin ently.At the international level for preparing and drawing up the international conventions, sample codes, and the conventional contracts widespread comparative studies have been carried out from regional and international organizat ions and institutes or is in the process of execution.At the national level countries have attached lots of significance to co mparative studies for correcting the existing regulations and the ratification of new codes.Nowadays comparative law is not only fruitfu l but is also necessary.Co mparative law is among the legal discussions which more or less studies and scrutinizes the law in its totality.Subjects such as what issues the law is pursuing for or that the legal codes of the country have undergone what changes and evolutions.

Standardize and Orchestrate the Rules and Regulations
Standardizing and orchestrating regulations and rules may be done through several ways.This process may be carried out at the national level through correcting the existing regulations or enac ting new codes at the international level through conclusion of international conventions and contracts and/or through voluntary admission of some regulations on behalf of merchants, firms, and institutes.

Stipulation from the Viewpoint of Foreign Legal Systems
Studying the key legal systems all over the wo rld ind icates that the behavior of legislators and mag istrates in several states toward stipulation isn't the same.The reason for it should be looked for in the existence of various and variable general policies of the states in relat ion to co mmercial contracts.These policies are variable for this reason that any state expresses a reaction which is proportionate to sits requirements and different fro m other states toward stipulation and this is variable on the grounds that in any state at any period in history stipulation hasn't been behaved equally .

Stipulation in the English Common Law
Specification of the legal entity of stipulation in the English Co mmon Law is of considerable significance in stating to put a law into force or the cancellat ion of it.Th is specificat ion of course rests with the judge until state by studying the conditions of the obligee that whether the sides of a contract are committed to execute it or not .
Fro m traditional point of v iew the English judge any time which sees a condition in which it is stipulated that in case one side of a contract doesn't fulfill h is/her commit ment he/she is obliged to pay a definite price to the other side.At first this question arises that whether the intention of the two sides to insert the condition is to determine a fine for the v iolator side or the sides of the contract have chosen the condition as a tool for determining the exact amount of the probable damage by the oblige?Giv ing effect to or turn down the condition by the contentious depends on the discernment and wisdom of the judge.This type of encounter by an English judge has roots in history and goes back to the traditional disputes and jealousies among courts of justice and the co mmon law.The relevant account is that in the past the common law courts according to the principle of freedom of contracts respected any condition for paying the stipulation and shunned from manipulat ing its compound.This behavior was exactly contrary to the behavior of the courts of justice which in so me contracts which their subject was cash declared the condition as null And void according to which the debtor committed to pay an amount which was by far more than the defin ite amount of debt in case of non-payment of the exact cost of debt and its interest on the due date.In fact the courts of justice wherever encountered with the fraud of creditors in such contracts and/or viewed the delay of the debtor in repaying the debt not as his/her fault or defect didn't fulfilled the condition of paying the stipulation which was inserted in the contract but they themselves determine the amount of the real damage and sentenced the oblige to pay for it.This kind of practice in the courts of justice was for a perio d in pract ice just concerning the commit ments which their subject was paying an amount of money; but, little by little this practice was performed for co mmit ments which their subjects were doing or quit doing an action of another kind.Later on in the eighteenth century any kind of condition which was determined on paying the stipulation in case it didn't have any correcting force or effect sand/or wasn't irrational was declared false or null and void .

Stipulation in the Law of France
The root of the law of France in this subject should be looked for in the law of the ancient Ro me and the Christian law.In the law of the ancient Rome stipulation was merely aimed for punishing or correcting the obligee.Co mmit ment of the debtor was inserted in the form of a condition according to which anytime the debtor didn't fulfill his/her co mmit ments/he should pay a price as a fine.Th is condition which was known as ''stipulatiopoenae'' was used in fact in cases in which obliging the obligor to fulfill his/her commit ments was impossible by this explanation that by co mmitting the obligor to pay an amount of cash as the princip le co mmit ment the obligee could force him/her to fulfill the intended commit ment.The condition was written fro m obligee's mouth or viewpoint as follows in the statement: ''If you alienate the such and such article to me do you promise to pay the such and such money to me?''The concept of the condition was in fact this one, ''the obligor should pay such and such money.''And this was the principal co mmit ment not the commit ment of the debtor.Another commit ment (i.e.alienation of the ownership of an article) was impossible to give effect to and was just inserted in the contract as the condition for paying the fine to the obligee .
These two-dimensional features of stipulation were later pursued in the Christion law of the Middle Ages.Exp lo itation of stipulation was in fact an instrument for escaping from religious codes which viewed the usury as a prohibition; that is instead of determining a percent as interest and/or the retaliation for delaying it was inserted in the contract that anytime that the obliger didn't pay his/her debt on time they should pay such and such money for this delay and the oblige directly brought a lawsuit against them to retake the determined cash as stipulation.

Stipulation in the Law of Germany
Contrary to the French legislator the German leg islator fro m the very beginning of formu lation or codification of the civil code (B.G.B.) accepted the two theories of ''Du Moulin'' and ''Poitiers'' according to which stipulation is changeable.Despite this, in Germany stipulation doesn't just bear the concept of determining the damage but in addition to this has a corrective aspect and for forcing the obligor to fulfill h is/her commit ment is used.(i.e.article number 420 of civil code) On the other hand the legal system of Germany contrary to the Co mmon Law doesn't dissociate the corrective stipulation and the obligational aspect which has the function of determining the exact amount of damage; that is in both cases the obligational aspect is capable of putting into force or enforceable .
But while the German leg islator hasn't shown any leniency toward stipulation the legal proceedings in this state have always attempted to restrict the users' freedom to make use of it.
The main regulations on stipulation should be looked for in the articles number three hundred and forty and three hundred and forty three of the civil code of Germany.A rticle number three hundred and forty permits th e creditor or obligee to bring a lawsuit against the debtor or obligor until any time which the stipulation fee wasn't sufficient to compensate for the real damage to the obligee s/he become able to claim for this surplus cash on the determined cash on condition that for the surplus cash according to the general law put forward reason or adduce.Despite this, as it is applicable to the French law German Law doesn't allo w the oblige to both ask for the pay ment of the stipulation and simultaneously ask for executing the principal co mmit ment unless in cases in which stipulation is being determined to compensate for any delay in fu lfilling the arranged commit ment.(Article 341).

Stipulation in the Law of the Former Soviet Socialist Republic
In the legal system of the Former Soviet Socialist Republic like German system stipulation has also a corrective aspect and had also been used for forcing the obligor to fulfill his/her co mmit ments and also had the aspect of determining the fixed damage (co mpensation) rate.This sense can be deduced fro m the amalgamat ion of the civil code regulation which was ratified in 1992 and the code of December 19th, 1933 in the Former Sov iet Socialist Republic on stipulation.According to the article one hundred and forty one of the civil code stipulation consists in a condition according to which one side of a contract gets committed that ''In case of lack of fulfillment of the commit ment and/or delay in performing it pay an amount of money to the other side as his/her possession.''In such a case the obligee will be rightful until by his/her choice receive the damage which is due to non -performance of the commit ment or the stipulation fees and anytime that the determined cash is determined to compensate for the damage of delay ing in fulfillment of the commit ment and/or inco mplete fu lfillment of the commit ment the oblige can claim the stipulation aside from executing the principal co mmit ment or claim for the stipulation and/or in case of the order of law the obligee can both claim the payment of stipulation and also claim the real damage .

Stipulation in the Law of Iran
In order to study the stipulation in the law of Iran we should clearly make a d ifference between the case in which the subject of main co mmit ment is an amount of money and the case in which the debtor is co mmitted to fulfill a non-monetary commit ment.Doubts which arose on stipulation in the first type of trades after the Islamic Revolution necessitate this separation.

St ipulation on Cash
In Iran prior to The Islamic Revolution the sides of a contract could in cases which the subject was the principal commit ment to pay and/or retaking an amount of cash similar to what was popular for the cash case reach an agreement which in case of delay in pay ment the debtor is obliged to pay an amount as stipulation to the creditor.Despite this, the mentioned cash couldn't violate or exceed the legal interest and each time the determined stipulation exceeded the legal interest the court investigated it and/or the registrar was obliged to reduce the rate of stipulation to the extent of the mentioned interest rate.On the contrary, in case the stipulation between the sides of a contract was less than the arranged legal interest rate the obligee was only rightful to claim the st ipulation and nothing more than that.

St ipulation on Non-Cash
Fro m the view point of Islamic jurisprudence inserting the stipulation in a contract has no religious prohibition.Fro m the viewpoint of Iran's statute the insertion of stipulation in cont racts is faultless.The principal article on stipulation is the article nu mber t wo hundred and thirty of the civil code of Iran which is similar to the article one thousands, one hundred and fifty two of the civil code of France which states: '' In case be sides the trade sit was conditioned that in case of violation the violator should pay a price as damage the judge can't sentence him/her to a payment wh ich is more o r less than the determined rate .'' In this manner the legislator in Iran considers the stipulation as determin ing the fixed damage rate as it was stated in the theories of ''Poiters'' and ''Du Moulin '' and also this is popular in France.The result of this feature of stipulation in the law of Iran is that its price is unchangeable.Pred icting th e stipulation in the international commercial contracts is usually being performed in two ways.At times the stipulation is for co mpensating for the damage wh ich is due to the non-performance of a co mmit ment whether a monetary or non-monetary ones; in this case stipulation sis being stated in the contract in the form of a defin ite amount of money and/or a percentage of the price of an article and the service which are the subject of that contract.Occasionally the stipulation is predicted in order to compensate for the damage which is due to the non-adaptation of what the obligor has executed with what is up to him/her due to the contract.In case of the occurrence of the last item the stipulation will be determined in the form of a percentage of the price of the contract and its rate is variable depending on the kind and significance of the fau lt.Determining the rate or amount of stipulation in case of vio lation is being predicted by means of specific mathemat ical equations which are pred icted in the contract in a way that in addition that a fair compensation will be plausible for the obligee the payable rate as the price of damage won't exceed a definite payment cap although a damage which is more than the predicted amount affect the oblige .

Stipulation and the System of Conflicting Laws
In terms of accuracy of stipulation it is impossible to hold a unitary national rule o r code as efficient to be accountable and as we will see it is possible that the determined stipulation become a function of mult iple internal codes.This point that the impact of stipulation depends on the accuracy and credit of the principal contract complicates the job as well since to state the accuracy of the stipulation the judge is at first obliged to study the principal co mmit ment of the obligor that himself necessitates the urgency of looking fo r the ruling code over the recent commit ment.This point is not the subject of our d iscussion and we leave it but concerning the stipulation itself by assuming the achievement of the accuracy of the principal co mmit ment no unitary code is effect ive.

Conclusion
Although several views exist concerning stipulation according to the account of this study but what can be stated is that firstly allud ing to the principle of will power or will do minance for the sides of a contract in executing the article ten of the civil code and by alluding to the principle of the authenticity of outwards of the words or statements.Secondly, by noting the theory by legal experts by which the law maker co mmits no error in codify ing the laws and by codifying an statement declares its meaning and aims at its purport and in the contracts the sides of it by stating any statement declare its meaning and by inserting the stipulation in fact intend to show another commit ment except for the principal co mmit ment wh ich in case of vio lation of the obligor it will be used against him/her.Th irdly, this study indicates that to what extent stipulation is being kept obscure.This point is specifically correct when stipulation has been used under the framework of an international contract; A contract which is dependent on an external element and bring the conflict ing interests of states and several legal systems against each other.In fact in terms of dissimilarity of the policy of states legal systems concerning the legal effect of stipulation in the private contracts aren't so significantly similar to each other either in terms of the content of the substantive law and either in terms of the systems of conflicting codes which g uide the judge in choosing the dominant substantive law on the stipulation.One part of this vagueness originates from this point that in the course of history within each state no unique or coherent procedure has been taken to handle stipulation.
Noting the presented issues in this research to prove the profitability and the necessity of determining the stipulation we can enumerate the fo llo wing reasons: 1) Frequency and the incessant use of this legal establishment in commercial contracts is the reason for its profitability and necessity.In fact, the priv ileges of inserting the stipulation in contracts are man ifo ld aside fro m this point that in terms of procedural law the burden of proof is taken from obligee's shoulder and is put on the obligor's shoulder.
2) The point that although the price of stipulation is changeable in some states by the judge, but the principle is that it is urgent and indispensible in all states.
3) Stipulation is that the debtor is exempted fro m doing his/her principal co mmit ment except in cases in which the sides of contract set different conditions since in fact stipulation according to its nature is replaced by a price which the obligor in case of vio lation according to the general princip le of compensation for the damage which is due to the non-performance of co mmit ments should pay.
In this manner stipulation allo ws the obligor until wh ile closing a contract predict the amount of damages which will be undergone in case of violating the contract and by noting the hazard which any commercial contract guarantees take a logical and sound decision.The obligee will also have an influential tool until s/he can force the oblige to perform his/her commit ment which s/he has taken on.