The Quarterly Journal of Judicial Law Views

The Quarterly Journal of Judicial Law Views

Conditions, Effects, and Scope of the Assignment of Contractual Liability and its Related Legal Concepts

Document Type : Research/Original/Regular Article

Authors
1 PhD student in private law, University of Judicial Sciences and Administrative Services, Tehran, Iran
2 Professor, Department of Private Law, Faculty of Law, University of Qom, Qom, Iran
Abstract
The assignment of liability is a form of contractual transfer whereby the liability arising from a breach of obligation in the primary contract is transferred to a third party (the assignee) through a tripartite agreement between the original obligor (the assignor), the obligee, and the third party. The contingent and derivative nature of this contract implies that its existence and continuity are strictly dependent on the validity of the primary contract. The legal effect of this mechanism is the transfer of contractual liability to the third party in the event of non-performance, essentially serving as a guarantee for the indemnification of the obligee. Consequently, the nullity, rescission, or automatic termination (infisakh) of the primary contract leads to the dissolution of the liability assignment agreement. In civil law systems, the validity of such contracts is justified based on the principle of freedom of contract and the "Rule of Eqdam" (taking action with prior knowledge), unless explicitly prohibited by law. Conversely, in Common Law, due to legal restrictions on various forms of assignment and its limitation primarily to the assignment of rights, this contract is generally deemed lack of legal validity. In the Iranian legal system, liability insurance and performance bonds can be considered manifestations of the assignment of liability. Using a descriptive-analytical method, this study addresses the legal validity of liability assignment contracts, their conditions for validity, their scope, and their legal effects. The findings indicate that the validity of this mechanism is defensible under Iranian law. Essential conditions for its formation include the explicit consent of all three parties and the existence of a base contract. Its thematic scope encompasses the principal debt, contractual damages, and moratory interest (late payment damages). Furthermore, legal implications such as the insolvency of the assignee and the possibility or impossibility of successive or circular assignments are examined.
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Volume 30, Issue 111
Summer 2025
Pages 187-218

  • Receive Date 20 January 2025
  • Revise Date 18 October 2025
  • Accept Date 14 October 2025