Study on Floating Performance in Irans' Contractual Obligations System

Introduction 
If we look at the flow of markets through the lens of behavioral economics, we find that reducing risk and fostering psychological assurance in the complex and volatile interactions of the contemporary era are of particular importance. The dynamic nature of economic variables such as inflation rates and global prices has created a turbulent environment for trade, redoubling the necessity for developing novel legal tools to manage these uncertainties. On the other hand, experience has shown that imposing restrictions does not necessarily steer commerce towards being productive. Instead, by providing diverse tools tailored to the complex needs of market participants, one can expect better efficiency and flexibility from the flow of economic exchanges. In this regard, "Floating Performance of Contractual Obligations, "as a novel and efficient tool, enables the adaptation of the performance of obligations to unforeseen economic fluctuations and significantly reduces the negative risk of non-performance of obligations in volatile markets like Iran. This research aims to investigate the feasibility of accepting "Floating Performance" in Iran's legal system and to elucidate its conditions, frameworks, and legal requirements. The main research questions are: Is this flexible mechanism compatible with Iran's legal principles? How can it be recognized and implemented within the framework of the existing legal system? The ultimate goal is to provide an operational model for using this tool in domestic and international long-term contracts.
Method
This research has been conducted using an analytical-descriptive method and relying on extensive library resources, including legal texts, specialized books and articles, domestic laws—especially the Civil Code and the Commerce Code—and important international documents such as the (CISG) and the UNIDROIT (PICC). The working method is structured as follows: Initially, to establish a common conceptual foundation and prevent misunderstanding, fundamental and key concepts of the research topic, such as "obligation, " "performance, " and "floating, " were scrutinized and carefully considered. Then, this novel mechanism and its methods of operationalization in contracts were introduced. In the next step, to enrich the analysis, an overview of international documents and judicial and arbitral precedents in foreign legal systems was provided to offer a brief perspective on globally accepted findings and solutions. Finally, the fundamental challenges and key legal questions related to the implementation of the floating performance mechanism, especially from the perspective of Iran's legal system with an emphasis on the concept of gharar (prohibited uncertainty) and the rules concerning the determinability of the subject matter, were discussed.
Results and discussions
The obligation, as a central concept in contract law, has not received the in-depth analytical and practical attention it deserves in Iran's legal literature. This is despite the fact that this term is used extensively and frequently in the Iranian Civil Code, and its pivotal role in creating legal relations is undeniable. A fundamental characteristic of an obligation, from the authors' perspective, is its possession of a financial equivalent or economic value; this characteristic is the key to solving the puzzle of accepting floating performance. Floating performance enables the value of the obligation over the long term not as a fixed figure, but based on a "calculable and transparent criterion" that specifies the value at any moment of performance. For example, determining the price based on a computational formula combining costs and fees according to officially announced rates or expert-determined rates are instances of such criteria. By establishing a "defined and calculable range, " floating performance of obligations not only does not lead to destructive ignorance or ambiguity according to common customary standards at the time of forming the obligation, but as a self-regulating mechanism, it also effectively prevents post-contractual ignorance and loss resulting from unforeseen fluctuations and is entirely consistent with the principle of freedom of will in contract law. This method is specific to time-bound contracts and can be implemented with enforcement guarantees such as automatic adjustment or dissolution of the contract in case of a breach of the defined range. The main challenge in accepting this institution is the perception of it falling within the bounds of uncertainties and gharar. Divergent views in the Iranian legal doctrine, attributed to the opinions of Shia jurists, have sometimes led to an inflexible perspective on the category of ignorance and ambiguity in contractual matters, which, although suitable for regulating relations in traditional societies and simple markets of the past, lacks the necessary efficacy for addressing the complexities of modern commercial interactions. If we distance ourselves from this inflexible view and analyze the customary and functional meaning of ignorance, gharar, and ambiguity according to the needs and practices of each market, this challenge will naturally appear solvable; as evidenced by its successful implementation in similar contracts like large-scale construction projects and in contracts of the securities market and futures contracts. Furthermore, contrary to the prevalent perspective in our legal doctrine, which primarily views matter from an ex-ante standpoint at the time of contract formation, one of the most important types of ignorance in today's commercial relations is "post-contractual ignorance" arising from unexpected fluctuations and the inherent complexity of economic affairs. The floating performance mechanism can provide fundamental assistance for the voluntary and automatic adaptation of the parties to these fluctuations in changing conditions, regardless of whether the possibility of such fluctuations had occurred to the parties at the time of conclusion. This institution is a clear manifestation of the sovereignty of will and modern rationality in risk management.
Conclusion
In conclusion, the floating performance of obligations is not only compatible with Iran's legal principles, particularly the principle of party autonomy and the rules of contract interpretation, but it also seems an undeniable necessity for Iran's legal system due to its ability to reduce contractual risk, increase flexibility and efficiency in contracts, and strengthen confidence in volatile markets. Understanding this compatibility and leveraging its benefits requires an updated, application-oriented, and custom-based approach to the contemporary needs of the economy and trade. It is suggested that the legislature, by enacting specific regulations or adding articles to the Civil and Commerce Codes, establish a transparent and precise framework for using this method to prevent future disputes. Furthermore, educating judges, legal practitioners, and economic actors to understand, accept, and correctly apply this novel mechanism is the next essential step towards its successful implementation and institutionalization within Iran's legal and commercial system.