Principle of Compensatory Character of Damages and Its Functions in Common Law and Iranian Law

Among the most important principles governing recovery of damages in Common law systems is that damages are compensatory. The principle applies in the field of the law of contracts as well as the law of torts. By the principle it is meant that damages are paid to compensate the injured party for losses sustained and not to punish the wrongdoer or depriving him from gains acquired by the breach. It has several functions like determining the kind of recoverable damages and limiting them. The latter function has some effects which include: plaintiff must suffer damage; damages are based on the loss of plaintiff and not on the gain of the defendant; damages must not exceeds the loss and damages are not punitive. The principle has faced several challenges but none of them could call into question its validity.After an inquiry into this principle and its functions and effects in common Law system, this article offers a brief study about it in Iranian law. The study shows this principle has not been recognized under the same topic, it could be inferred from various rules and other principles regarding civil liability.