The Nature and Conditions of Contractual Compensation in Iraqi Law and Islamic Jurisprudence

Abstract

Abstract: Contractual compensation is accepted under Iraqi law under conditions that ensure justice and non-arbitrariness. It is also accepted in Islamic jurisprudence under legal controls that achieve a balance between rights and obligations without violating the provisions of Sharia. The question that arises is what is the nature and conditions of contractual compensation under Iraqi law and Islamic jurisprudence. To answer this question, it is stated that contractual compensation is an agreement concluded between the two parties to a contract to determine the amount of compensation in advance in the event of a breach of contractual obligations. Under Iraqi law, this type of compensation is permissible if there is an explicit agreement between the two parties, and the damage is probable and quantifiable at the time of contracting, provided that the compensation is not excessive to the point of injustice or exploitation. The court has the right to adjust the amount if it is proven to be disproportionate to the actual damage. In Islamic jurisprudence, contractual compensation is subject to Sharia principles, such as avoiding harm to others and the prohibition of uncertainty and usury. Therefore, the condition must be free of injustice and not become a tool for coercion or illicit gain. The ruling on this condition varies according to the school of jurisprudence. I relied on a comparative and descriptive analytical approach, and we conclude that entitlement to contractual compensation requires the presence of several conditions common to Iraqi law and Islamic jurisprudence: error, harm, and cause. We concluded that the Iraqi legislator recommends reviewing Iraqi legislation regarding contractual compensation to ensure its compatibility with modern principles that take into account changes in business practices and commercial contracts..