Non-Deterrence of the Principle of Compensation in Consumption Contracts (A Comparative Study in Iranian and French Law)

Most civil law and civil liability regimes emphasize the principle of balance between loss and the amount of damages awarded to the injured party. The principle of compensation in French law is without exception and has a similar application in the field of contracts and civil liability. In Iranian law, as we will see, this principle is questionable and it is better to call it the principle of balance between loss and compensation. This principle seems to be ineffective, especially with regard to unfair terms in consumer contracts. Under French law, these terms are prohibited in consumer contracts, where one party is a professional and the other party is a consumer. The forbidden term is removed from the contract, the rest of which remains valid. In Iranian law, the claim of invalidity is not documented in any laws and the existing enforcement sunctions does not have the necessary deterrent to prevent the losses. This study shows that in both legal systems, consumer protection laws do not effectively prevent contractual unfair terms, because the principle of full balance between loss and compensation does not create sufficient and effective incentives for the parties. Therefore, it is necessary to consider punitive damages in both legal systems as an effective incentive to avoid Lucrative faults.