Recently, the Israeli Ministry of Justice published a memorandum of law amending the Contracts Law. The amendment seeks to introduce unique rules of interpretation to business contracts. There’s been a wave of dramatic headlines in the economic press suggesting that Justice Minister Yariv Levin is attempting to nullify the Supreme Court’s Aprofim ruling through this amendment. However, the amendment may not be as drastic as reported. According to Barnea Jaffa Lande & Co.
Without straying from its existing commitment to legal stability and predictability, the proposed law reflects logical reasoning and aligns with recent court rulings. It emphasizes the indispensable role of fairness in drafting and interpreting commercial contracts.
For years, the Israeli Contracts Law did not have an explicit requirement of good faith during negotiations. The proposed amendment rectifies this gap and entails an added importance for the role of good faith in contract negotiations. The amendment places an obligation on the parties to carry out negotiations in good faith and to avoid causing damage to the other party during these negotiations.
This may bring about a significant change to business negotiation practices, where the win at all costs mentality is often foreground. However, it upholds the fundamental principles of fairness and equity central to the Israeli legal system, without creating seismic shifts in the law.
Therefore, while Justice Minister Yariv Levin’s attempt might not overturn the Supreme Court’s Aprofim ruling, it does bring some insightful changes to the Israeli contract law without compromising its core values. The amendment indeed contributes towards ensuring a more equitable legal environment in business contract negotiations and interpretations.