Examination of legal status of object of transaction in information-based contracts

Document Type : Original Article

Authors

1 Assistant Professor, Faculty of Law & Political Science, Ferdowsi University of Mashhad, Mashhad, Iran. Corresponding Author Email: alisaatchi@um.ac.ir

2 Ph.D. Candidate, Faculty of Law & Political Science, Ferdowsi University of Mashhad, Mashhad, Iran

Abstract

 
In today's world, where different sciences are rapidly advancing, social exchanges are primarily based on information, which may have various terminological definitions across various sectors. In the Iranian legal system, a definition of information can be found in Paragraph (a) of Article 1 of the “Law on Free Access to Information” enacted in 2009. According to this article, information is defined as “any type of data contained in documents, stored in software form, or recorded by any other means.” It is worth noting that despite the different definitions and types of information in diverse fields, information has gained a special status in contracts between individuals as the subject of the transaction. The aim of information-based contracts is the exchange of information that is not publicly available and is transferable as valuable and intangible assets. Notable examples include the sale of technical knowledge for the production of a product or the provision of specialized consultancy services. The inherent characteristics of information, such as intangibility, simultaneous usability by multiple individuals, increasing value compared to other assets, and easier accessibility, necessitate the independent definition of “information-based contracts, ” identification of transferable types of information, and formulation of legal rules appropriate to this type of contract. Therefore, considering the aforementioned materials and the silence of our country's research literature on information-based contracts, the present study seeks to use a descriptive-analytical approach, while identifying appropriate legal bases for concluding information-based contracts and introducing contractual formats appropriate to the subject of these contracts, to explain the most important effects of information being traded in the field of contract law. The findings of this research indicate that not all types of information are necessarily tradable, and only those with economic value can be accepted as the subject of a transaction. These are generally divided into two main categories: first, specialized information, which usually lacks exclusivity and can be accessed by various experts. Access to this type is often intended to solve temporary problems and usually does not generate specific profits for the user. Second, information with intellectual property aspects, which is entirely exclusive and accessible only through the owner. The commercialization of such information and the mass production of resulting products can bring significant financial benefits. Although access to both types of information requires payment and the presence of an information owner, the main difference lies in the method of use and the resulting financial benefits. Therefore, considering the mentioned differences, it is necessary to draft contractual forms appropriate to each type of information. For this purpose, service provision contracts can be used for specialized information, and license agreements can serve as appropriate formats for the exchange of intellectual information. Regarding the first one, it is necessary to draft a contract that is based on the general provisions of service contracts and specifically tailored to information as the subject matter. This approach can also be observed in European documents as well as certain service contracts, such as construction, design, and treatment contracts. While these contracts fall under the category of service-based contracts, they have their own specific contractual frameworks and terms. Regarding the intellectual property, given the widespread commercialization goals and the nature and characteristics of intellectual property rights, one of the most suitable contractual frameworks for the development and commercial use of intellectual assets is a license agreement, which is also accepted under Iranian law. Another important result of this study is the fundamental distinction between information-based and goods exchange contracts. Given the nature and characteristics of information, the legal rules governing information-based contracts—whether at the stage of formation, execution, or termination—differ fundamentally from those of goods-based contracts. These differences are evident in areas such as contractual expectations and legal remedies. It seems that in all types of information-based contracts, given the specific characteristics and requirements of information as the subject of the transaction, the status of contractual expectations will be different from other contracts. For example, in goods contracts, the contractual expectation that the goods are free of defects at the time of conclusion is accepted (Article 423 of the Civil Code); however, in the context of information-based contracts, such an expectation is not applicable. Since information does not have a physical existence at the time of contract formation, quality assessment generally becomes apparent only after use. Thus, even after contract conclusion, the information may be defective, and invoking legal remedies related to defects may be possible. Also, guaranteeing the absence of any defects in information-based contracts in the field of intellectual property, such as software or inventions, is unreasonable and contrary to prevailing practices, since some degree of error is always present in such information. In this case, beyond the need to reconsider the concept of defect, given the irreversible nature of information, usual legal remedies cannot be applied to defective information, and other legal solutions must necessarily be identified and utilized. Therefore, although one of the purposes of contract termination due to defect in the subject matter is to prevent harm to the parties and return them to their pre-contractual state, this is not possible in information contracts. Because of the intangible nature of information, it cannot be returned, and thus termination of the contract due to a defect would result in the unjust enrichment of one party, which is legally unacceptable. In this case, the subject matter may be considered as destroyed, and according to the first clause of Article 429 of the Civil Code, the only remedy would be to receive compensation (Arsh), without the possibility of contract termination. It is emphasized that this view, due to the nature of information and the impossibility of returning the defective subject matter in information-based contracts, distinguishes such contracts from others

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Main Subjects


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