Document Type : Original Article
Author
Assistant Professor, Department of Private Law, Faculty of Law and Political Science, University of Mazandaran, Babolsar, Iran.
Abstract
Based on the Principle of Freedom of Contract, agreements are formed within the civil-law context to facilitate the realization of the parties’ objectives through contractual arrangements. However, in commercial law, determining the scope of the impact of private agreements on the rights of a holder of a negotiable instrument—who is generally subject to mandatory rules—is of considerable importance. The holder of a negotiable instrument, in addition to the inherent right to demand payment of the instrument’s face value, possesses important rights such as endorsement, recourse against obligors on a joint-and-several liability basis, modification of the instrument’s amount, and other related prerogatives. Correspondingly, certain obligations are imposed on the parties liable for payment. This article examines whether an agreement between the holder and some or all subsequent endorsees to modify the holder’s rights—such as a clause excluding joint-and-several liability, prohibiting further endorsements, increasing or reducing the instrument’s amount—affects the holder’s rights against obligors who were not parties to such an agreement, under Iranian law, international instruments, and common law. In international instruments and in common law, these issues are generally addressed with greater clarity and explicit protections compared to Iranian law. Except in cases where private agreements impose an additional burden of liability, and are incompatible with the rights of third parties who were not involved in the agreement and the consent does not conflict with the fundamental nature of the legal institution at issue, such agreements are generally enforceable within the domain of negotiable instruments.
Keywords
References
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