A brief overview of the principles governing contracts and the establishment of a civil company under a civil partnership contract and the method of calculating the real profit from actual business activity reveals one of the significant issues plaguing the Iranian banking system: the formalistic nature of partnership contracts. Our legal system considers the contents of contracts valid as long as they are not contrary to imperative and prohibitive laws.
Additionally, according to the contrary meaning of articles 223, 219, and 10 of the Civil Code, contracts are only supported by the principles of validity and contractual freedom and are obligatory as long as they are enacted according to the law. Otherwise, if the law is not observed, they are deemed invalid and illegitimate. The legislator has enacted specific regulations for forming a civil company and calculating profit in this type of company in monetary and banking regulations, which neither the bank nor the borrower can contradict. This research examines how a civil company is formed between a bank and a borrower, the timing, and the method of calculating the profit derived from this type of financing. With a brief overview of the principles governing contracts, the effects of imperative and prohibitive laws and regulations, the characteristics of partnership contracts (contracts with variable returns), and ultimately ending with an examination of the civil partnership contract. The result of this research is that a civil company is not formed merely by concluding a civil partnership contract but is realized with the deposit of the partnership share in the civil company’s bank account and, if the share is non-monetary, by delivering it to the manager or managers of the civil company. The profit is calculated after the completion of the company’s subject, not the end of the partnership contract, and by assessing the actual business activity. Therefore, calculations based on a fixed profit rate are null and unclaimable.
