An Analysis of Legal Nature of Direct Debit Contract

Articles in Press

Document Type : Original Article

Authors

1 Ph.D. Student in Private Law, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran

2 Associate Professor of Department of Law, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

3 Department of Law, Faculty of Law and Humanities, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran

Abstract

Development of modern payment methods and facilitation of them according to current economic requirements seems to be an essential factor in dynamism of today's banking systems. Direct debit, as a common payment method, especially in bank debit transfers is one of a kind. Its flexibility and safety is grounded in the agreement between the account holder and the beneficiary who is mostly the creditor. This paper aimed to analyse the nature and some features of this type of contract to explain legal relations between the parties. By comparison with nominate contracts completely, the direct debit contract cannot be classified under any of the existing contracts; as a result it should be considered as a kind of innominate contract whose effect is to establish the "right" to transfer money from a bank account according to the agreed terms of contract. As a rule, looking at nature of right, the contract must be generally irrevocable. A contract of adhesion applies to this case and the account holder (the consumer of goods and services) as the weaker part mostly, should be legally supported. In addition, its uncertain nature leads to some ambiguities in relations between the parties and it tends to provoke disputes. Furthermore, feeling the need to replace cheque and promissory notes with a novel payment method to handle civil and commercial transactions and to achieve banking and economic prosperity multiplies the significance of a proper and specific legislation on this issue.

Keywords

Main Subjects

Files

Share

How to cite

Statistics