A Comparative Study of the Objective and Subjective Standards of Intention in English Law, the United Nations Convention on Contracts for the International Sale of Goods, and Iranian Law

Abstract

The present study employs a descriptive-comparative method to examine the objective and subjective standards of intention in English law and the United Nations Convention on Contracts for the International Sale of Goods (CISG), and to compare them with Iranian law. Intention, as a fundamental element of every contract, plays a decisive role in the formation, validity, and interpretation of contractual relationships. Nevertheless, one of the most fundamental challenges in contract law concerns the conflict between the parties’ “actual intention” and the “external manifestation of intention” through their words and conduct. The significance of the present study lies not only in ensuring contractual justice and respecting party autonomy, but also in promoting transactional security and predictability, particularly in domestic and international commercial relations. Legal systems have adopted different solutions in addressing this conflict. English law, through the consolidation of the objective theory of contract, bases the interpretation of contractual obligations on the understanding that a reasonable person would derive from the parties’ statements and conduct, and generally accords no legal effect to an undisclosed subjective intention; an approach aimed at strengthening stability and security in transactions. By contrast, Article 8 of the CISG establishes a systematic two-stage framework: at the first stage, where the other party knew or could not have been unaware of the actual intention, that actual intention governs; at the second stage, where such intention cannot be established, the reasonable-person standard is applied in light of all relevant circumstances. Iranian law, although theoretically grounded in the primacy of intention and influenced by Imami jurisprudence, also recognizes objective elements in contractual interpretation, including custom, usage, and the ordinary understanding of contractual language. It should be noted that the present study, while examining the conceptual structure and practical functions of the objective and subjective standards in the three aforementioned legal systems, seeks to analyze the strengths and weaknesses of each approach in light of considerations of contractual justice and legal certainty. The findings indicate that an exclusively subjective approach may reduce predictability and increase uncertainty, whereas a wholly objective approach may, in certain circumstances, disregard the parties’ actual intention. Against this background, the interpretative model adopted by the CISG, by establishing a structured balance between ascertaining actual intention and applying an objective reasonable-person standard, provides a more coherent and effective framework. This model may serve as a useful source of inspiration for the development of the theory of contractual interpretation in Iranian law and for enhancing its conformity with the standards of international trade.