This dissertation deals with the principles governing the institution of bankruptcy in codified legal systems [with an emphasis on Iranian and Egyptian law]and the institution of taflis in the Islamic legal system (Ja’fari jurisprudence).

The aim of this study is to Show the congruity and resemblance of these two concepts, to find out their differences and similarities in detail, and to justify the detailed provisions of each institution using the legal principles of the other system.

Bankruptcy and taflis are institutions introduced to counter the problems resulting from the subject of inability to payment. The basis for the introduction of these institutions is the notion that the property of debtor is to be regarded as the general security for the creditiors. On this basis, in case of inability of the debtor to payment, the whole property of the creditor (and the property itself), given the order of the court, will be regarded as being the subject of the creditor’s rights. This means that the creditor’s right accrues to the whole property of the debtor.

In the passage of time, the rules and provisions on bankruptcy has been made exclusive to merchants in most Romano – Germanic legal systems, and this appears not to be due to objective expedience surrounding the matter, but probabley due to special conditions and circumstances of time and place.

The other difference between bankruptcy and taflis is that the subject of bankruptcy is failure to pay debts, while the subject of taflis is the debtor’s property not being sufficient to meet debts. However, even this difference does not lead to the dissimilarity of these two legal institutions; since in most legal systems, unlike Iranian legal regime, the debtor’s failure has been regarded as being the subject of bankruptcy, not per se, but as a presumption for debtor’s property not being sufficient to pay debts.

As far as the legal effects are concerned, it has to be accepted that there is a complete similarity between these two legal institutions. This is because the main consequence of bankruptcy, i.e. being deprived of any legal action, in analytic consideration, has a common basis with precautionary prohibition, which is referred to as the legal consequence of taflis in Islamic jurisprudence.

Another important point in this study is to give a careful consideration to the legal institution of insolvency in different legal systems, as well as Islamic jurisprudence. Like bankruptcy and taflis, this institution has also been analytically considered in this dissertation.

The final recommendation of this study is that, due to deficiencies and shortcomings of the regulations of the Iranian Civil and Commercial Code regarding the issue of failure to pay debts, it is advisable to pass a general and inclusive law – not just being made exclusive to merchants – covering all possible aspects of the issue of bankruptcy, so that a clear solution could be provided for the important question of inability of non – merchant persons and legal entities of private law to pay debts, not being necessarily dependant on ordinary seizure of property of the debtor.