Journal of Legal Research

Journal of Legal Research

Goodwill in Case of Destruction of Lease Object in Iranian Law: Case Study

Document Type : Original Article

Authors
Iraj Babaei 1
Roghaye Ebrahimpour Omam 2
1 Associate Professor, Department of Private Law, Faculty of Law and Political Science, Allameh Tabataba'i University, Tehran, Iran.
2 PhD Student in Private Law, Faculty of Law and Political Science, Allameh Tabatabae'i University, Tehran, Iran.
10.48300/jlr.2024.480754.2753
Abstract
Certain commercial leases governed by Iranian landlord-tenant legislation continue beyond the expiry of the agreed lease term, and the landlord-tenant relationship may therefore persist for an extended period. During this time, the leased building may be destroyed, or legislative changes may make it impossible for the tenant to continue operating the business. The legal status of the tenant’s statutory goodwill right (haqq-e kasb-o-pisheh va tejārat) and key-money right (haqq-e sarqofli) in such circumstances remains uncertain, as the legislature has not expressly determined the consequences of destruction for the lease or the rights arising from it. Judicial practice is likewise inconsistent. Most judges favour the continuation of the lease despite the destruction of the leased premises, but have not adequately clarified the parties’ rights and obligations concerning reconstruction or the possibility of compelling the landlord to rebuild. Among judges who consider the lease terminated, opinions differ as to whether the statutory goodwill right or key-money right survives. Although most favour the preservation of these rights, they have not sufficiently explained the legal basis, scope, or consequences of their survival or determined the corresponding rights and obligations of the landlord and tenant. This article examines judicial practice concerning the tenant’s statutory goodwill right and key-money right following the destruction of leased premises, identifies the strengths and weaknesses of existing judicial approaches, and seeks appropriate legal solutions. Employing a descriptive-analytical method, the study draws on court judgments, judicial discussion sessions, legal literature, legislation, and relevant online resources. The findings indicate that legislative ambiguities and inconsistent judicial interpretations have created further uncertainty and practical difficulties in commercial landlord-tenant relationships. The article therefore calls for a review of the relevant legislation and the elimination of existing statutory gaps to prevent conflicting judgments and establish a clearer legal framework governing commercial tenancies.
Keywords
Destruction
Key-Money Right
Tenant&‌rsquo
s Statutory Goodwill Right
Judicial Practice
Leased Premises
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Journal of Legal Research
Volume 25, Issue 66
Summer 2026
Pages 371-405