Document Type : Original Article
Authors
Department of Law, Na.C., Islamic Azad University, Najafabad, Iran
Abstract
Unfair terms in banking contracts, though often embedded within standardized documentation, represent a significant point of conflict between the autonomy of contracting parties and the regulatory imperative of consumer protection. This study analyzes the legal nature and effects of such terms in Iranian banking contracts and evaluates the capacity of domestic law to regulate them, employing a comparative approach based on the European Union’s consumer-protection framework. Using a descriptive–analytical methodology grounded in statutory analysis, banking regulations, judicial decisions, and Directive 93/13/EEC, the research shows that clauses such as unilateral interest-rate adjustments, disproportionate obligations, risk-shifting arrangements, and restrictions on judicial recourse disrupt contractual equilibrium and fall squarely within the modern conception of unfair terms.
The findings indicate that although Iranian law provides theoretical bases—such as the doctrines of la zarar, prohibition of gharar, and invalidity of terms contrary to the essence of the contract—for challenging these clauses, the absence of a dedicated statute, limited judicial and administrative oversight, lack of ex ante contract control, and the nonexistence of specialized consumer-protection bodies substantially restrict the effectiveness of these mechanisms. The study concludes that meaningful reform requires the enactment of a comprehensive law on unfair terms in banking contracts, the standardization and increased transparency of contractual forms, strengthened judicial and regulatory supervision, the establishment of an independent financial dispute-resolution authority, and improved consumer legal literacy. These measures, implemented within the framework of Islamic banking principles, would support the creation of a more balanced contractual environment aligned with international consumer-protection standards.
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