Caselaw

Civil Appeal 4628/93 State of Israel v. Apropim Housing and Development (1991) Ltd. IsrSC 49(2) 265 - part 32

June 4, 1995
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".accordance with that meaning

Indeed, a contract is a bilateral legal action.  The intentions are those of both parties (see Civil Appeal 154/80 Burchard Lines Ltd London v. Hand Robton in Tax Appeal [28], at p. 223).  When both parties have a common subjective understanding – which can be learned from external circumstances – as to their intentions, the content of the contract should be interpreted according to it, and not according to the (objective) intentions that arise from the (clear) language of the contract.  Therefore, "the language of the contract should not be given a meaning, which, although it is semantically feasible, both parties accept that it does not reflect their intentions" (Civil Appeal 832/81 Relfo (Israel) in Tax Appeal v. Norwich Union Fair Insurance Society Limited [29], at p.  It also seems to me that the rule of interpretation, according to which "a contract that is given to different interpretations, the interpretation that fulfills it is preferable to an interpretation according to which it is void" (section 25(b) of the Contracts (General Part) Law) also supports this approach.

What is the point of ignoring the common subjective intentions of the parties – an intentions that arise from reliable external circumstances – even if it does not arise from the clear language of the contract? Isn't it preferable to recognize the existence of the contract, as both parties sought to do? What is the point of declaring the content of a contract, according to the intentions of the parties that arise from the clear language of the contract, and then declaring it non-existent?  For there is no final judgment

 

(cf. Civil Appeal 450/82, 46/84[2], at p. 667)? Is there not a correlation between "finality" (within the scope of the conclusion of the contract) and the "intention" (within the scope of its interpretation)? We have already seen that the objective test of contract law is intended to protect the interest of the parties' reliance on the contract.  But where both sides share a subjective understanding, what is the interest that is being protected if this understanding is ignored? President Shamgar rightly noted that:

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