The Minister of Justice and the Legal Counsel to the Government are jointly promoting a significant amendment to contract law in Israel, and to completely abolish the courts' interpretation of business contracts.
Justice Minister Yariv Levin announced that he intends to lead to a dramatic legislative amendment, As part of the legislation an amendment will be made to the Contracts Law which will completely cancel the 'Aprofim rule' in all matters related to business contracts, The rule was established by the President of the Supreme Court at the time Aharon Barak, and it was established that the courts could interpret business contracts and other contracts, although different from what is written in them, and to change their conditions.
Justice Minister Levin announced that the advancement of the law came with the goal of increasing certainty in the business world with regard to the drafting of contracts and their interpretation in Israeli courts, and in a rare step, the advancement of the legislation was done in cooperation and with the support of the legal advice to the government.
The Aprofim rule was established as part of the Aprofim ruling, given by the Supreme Court on April 6, 1995, in which the president of the court stated that reference to the language of the contract, signed between two parties, is not a binding factor in the interpretation of contracts, and that a judge can take into account external and additional circumstances, as part of an interpretation of the contract.
The rule established by the Supreme Court had long-term consequences for commercial relations in Israel, when, in a large number of markets and industries, such as the high-tech and financial industries, many contracts are signed under the agreement, that disagreements in connection with contracts, will be examined in legal systems outside of Israel, in countries such as England or the USA, in order to stick to to the language of the contract and avoid legal interpretations.
According to Levin's proposal, a unique interpretation rule will be established in relation to contracts with business characteristics, according to which a business contract will be interpreted according to its language, except in circumstances that will be detailed. In addition, the proposal defines what a business contract is, in which the court will not be able to intervene and interpret it, or if necessary, conditions will be established in the contracts according to which the court can interpret the contract.
Deputy Prime Minister and Minister of Justice, Yariv Levin spoke about the proposed change and explained: "The important legal memorandum, that is now published for public comment after the completion of in-depth and painstaking staff work, is intended to assist the business sector when drawing up contracts. It is our duty to ensure strengthening the value of freedom of contracts, to increase certainty for the business sector, and to simplify the ability to draw up contracts and rely on them. In addition, the amendment is also expected to reduce discussions in the courts and reduce idle discussions, since the contracts will be interpreted in a simple and clear manner according to their language. I thank the Attorney General Deputy of Israel advocate Carmit Ulis and her team for their important work in formulating the legal memorandum."
