Kashani v. TSANN KUEN CHINA ENTERPRISE CO.
13 Cal. Rptr. 3d 174 | California Court of Appeal | 2004
What This Case Means for Subcontractors
Three business partners sued a Chinese company for backing out of an agreement to build a manufacturing plant in Iran. The court ruled the contract was illegal and unenforceable because it violated U.S. federal sanctions laws prohibiting transactions with Iran. The partners lost their case and couldn't recover their money or lost profits. This matters to subcontractors because contracts involving sanctioned countries are void—you can't enforce them even if you've already spent money on the project.
Key Takeaways
- •Never sign contracts involving sanctioned countries (Iran, North Korea, Syria, etc.) without explicit U.S. government approval. They're unenforceable and you'll lose your investment.
- •Check federal sanctions lists before bidding on international projects. If a client, supplier, or project location is sanctioned, walk away—the contract won't hold up in court.
- •Even if you've already spent money on a sanctioned deal, you cannot recover it through litigation. The court will dismiss your case as illegal, regardless of how much you've invested.
The agreement upon which plaintiffs' claim is based is illegal and against public policy.
Frequently Asked Question
Can I sue to recover money I spent on a construction project in a sanctioned country?
No. Courts will dismiss your case because the contract is illegal under federal sanctions law. You cannot recover any money you've invested, no matter how much you spent or how far along the project was. Always verify that your client and project location are not subject to U.S. sanctions before signing any agreement.
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