In commercial transactions, the contract is the most essential legal instrument reflecting the mutual agreement and shared intent of the parties. In Iranian law, the key elements required for a valid contract are outlined in Article 190 of the Civil Code. While oral agreements are legally recognized in Iran, certain jurisdictions require written contracts—either in the form of official or private deeds.
Commercial contracts, by their nature, differ from other types of agreements due to the fast-paced nature of trade and financial exchange. It is not uncommon for traders to conduct business over many years through phone calls alone, without ever meeting in person or formalizing the arrangement in writing. In modern international commerce, digital and electronic communication—including the transmission of contract terms and subsequent agreements via email—has become widely accepted. The use of electronic signatures and data authenticity mechanisms now makes such communications legally enforceable in many courts.
Iranian legislation—including the Commercial Code, Civil Code, Electronic Commerce Act, and the Law on International Commercial Arbitration—combined with various international conventions to which Iran is a signatory, create a complex and sometimes overlapping legal framework. These instruments contain specific rules on subjects such as contract formation, termination, rescission, penalty clauses, contractual guarantees (including performance bonds and letters of credit), and dispute resolution mechanisms like arbitration and mediation. Interpreting and applying these provisions in international commercial contracts requires a high level of legal expertise.
Such contracts typically involve parties from different legal jurisdictions. In the event of a breach, the first challenge often lies in the practical difficulty of initiating legal proceedings in the claimant’s home country—especially when locating the defendant and attaching their assets becomes problematic. It is a common mistake for Iranian companies to focus solely on goods and price terms in the draft contract presented by a foreign party, overlooking critical clauses due to overreliance on trust or unfamiliarity with legal English terminology. Once a dispute arises, the absence of a properly negotiated contract may severely limit a party’s legal options, even if they later retain legal counsel.
For this reason, we strongly recommend engaging an experienced legal advisor from the outset—well before signing any international commercial contract. Specialized legal consultation ensures that you are not unknowingly waiving key rights or remedies. Avoid generalist or inexperienced attorneys unfamiliar with the intricacies of international commercial law.
To protect your legal and commercial interests, we invite you to consult with Mr. Khademi’s Law Office in Iran, which brings over 20 years of experience in handling commercial disputes. Mr. Khademi holds a Class A legal license from the Iranian Bar and is a registered member of the International Bar Association (IBA). He is fluent in English and well-versed in the structures of international trade. Through his Dutch-based firm AdvoLink, supported by a network of international and Dutch legal professionals, Mr. Khademi offers comprehensive legal services that meet European standards. Iranian and foreign businesses are welcome to benefit from his expertise and the firm’s global reach.