Conflict of interests in legal transactions concluded by agent

Document Type : Research Article

Authors

Department of Private and Islamic Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran

10.22059/jolt.2024.377722.1007303

Abstract

One of the main obligations of the agents is to avoid being in a situation of conflict of interests; In the sense that the agent's actions must be in line with protection of principal's interests. On this basis, a general rule under as to the prohibition of conflict of interest in agency has been identified in comparative law, which will affect the validity of the legal acts of an agent. Violation of this rule can lead to the voidability of the contract (or institutions similar to it in national laws) and the civil liability of the agent or a third party lacking good faith. This research, inspired by comparative teachings, has sought to discuss the possibility of identifying the general such general rule, as well as the effects and guarantee of its implementation in Iranian law, and this result has been obtained that it is possible to establish a general rule prohibiting the situation of conflict of agent’s interest with the principal based on the traditional rules of agency in civil law and Islamic law, which will result in the voidability of the legal act concluded by the agent with a conflict of interest. However, the guarantee of the implementation of the conflict of interests of the agent with the principal in the field of civil liability in Iranian law is more limited in terms of predicting punitive damages for the agent or the responsibility of the third party compared to comparative law.

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References

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Private Law
Volume 21, Issue 2
Autumn & Winter
October 2024
Pages 219-231

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