Explanation and Analysis of the Reasonableness Requirement in the Contract of Agency from the Perspective of Iranian Law

Abstract

This study aims to explain and analyze the reasonableness requirement in the contract of agency from the perspective of Iranian law. Although this concept has not been explicitly and independently formulated within the Iranian legal system, it is implicitly and prominently reflected in principles such as the obligation to safeguard the principal’s interests, the practice of reasonable persons (binā-ye ʿuqalā), and reasonable custom. The significance of this issue stems from the increasing use of general and irrevocable powers of attorney and the growing complexity of legal relationships, which have created opportunities for unconventional and, at times, harmful conduct. Consequently, the need to identify criteria capable of controlling and delineating the scope of an agent’s authority has become increasingly important. The principal research question is: How can the reasonableness requirement in the contract of agency be conceptualized under Iranian law, and what effect does it have on the validity and legal effectiveness of such a contract? Accordingly, this study adopts a descriptive-analytical approach and draws on library-based sources to examine provisions of the Iranian Civil Code, legal doctrine, and judicial practice in order to clarify the theoretical and practical dimensions of this concept. The findings indicate that the reasonableness requirement functions within the legal system as an implicit yet fundamental standard governing agency relationships, with its principal functions observable in three areas: interpreting the scope of authorization, assessing the principal’s interests, and evaluating the agent’s liability. The findings further demonstrate that, under Iranian law, professional custom and the reasonable-person standard play particularly significant roles in determining the concrete manifestations of this requirement. Although the reasonableness requirement has not been expressly recognized as an independent principle in statutory provisions, it operates as an underlying regulatory principle within the structure of the contract of agency and plays an important role in maintaining a balance among freedom of will, contractual trust, and protection of the principal’s interests. Ultimately, strengthening the status of this concept through more precise theoretical elaboration and assessing the feasibility of its explicit statutory recognition could enhance legal certainty and reduce disputes arising from broadly formulated powers of attorney.