Judicial Penalties and Penalty Clause in England law (in Comparative Study with Iranian Law)

Judicial penalties (including punitive damages, nominal damages and aggravated damages) have a punitive effect and an uncompensatory nature in England law and, unlike Iranian law, England¢s common law has drawn a definite boundary between liquidated damages and penalty clause, and nullifies penalty clause, and the promisee can only recover actual damage that incurred. Impossibility of punishment by contractual parties is the most important reason of this nullifying. In the current paper, the authors are trying to analyze the nature, basis and requirements of judicial penalties and penalty clause. Also the most important criteria of distinction among the penalty clause, liquidated damages and other similar concepts have been studied. In addition, the position of Iranian law toward judicial penalties and penalty clause has been investigated briefly. It was concluded that judicial penalties are forbidden or at least are much restricted at present, and judicial penalties have a limited dimensions in Iranian law.