Civil Appeal 4628/93 State of Israel v. Apropim Housing and Development (1991) Ltd. IsrSC 49(2) 265 - part 35

At the end of the first stage, the court may give the contract an (objective) interpretation, the result of which is the possibility of the parties withdrawing from it (due to an operative error), without this being required by the balance of interests worthy of protection.  But beyond that,  section 16 of the Contracts Law (General Part) states that "if there is a clerical error or similar error in the contract, the contract shall be amended according to the intention of the parties, and the mistake is not grounds for cancelling the contract."  But how will the court know the intentions of the parties if it learns about it only from the clear (but erroneous) language of the contract? Clearly, this provision presupposes the possibility of turning to external circumstances in order to learn from them about the intentions of the parties.  But how will this information be obtained if the court determines (in advance) that the language is clear and there is no room to turn to external circumstances? And how can the judge determine that the contract is for the sake of appearance (section 13 of the Contracts Law (General Part)) if the only appearance that the judge's eye sees is the clear language of the contract? The two-stage theory is inconsistent with the principle of good faith.10 A central principle in the field of civil law in general, and in contract law in particular, is the principle of good faith.  The provision regarding 'good faith' "is a 'royal' provision with many facets" (High Court of Justice 1683/93 Yavin Plast in Tax Appeal et al. v. National Labor Court et al. [32], at p. 708).  One of the aspects of the principle of good faith is that a contract must be interpreted in good faith (see: Civil Appeal 453/80 [9]; Civil Appeal 479/89 [8], at p. 845; Civil Appeal 5559/91 K.C.  Gas and Energy Enterprises (1982) in a tax appeal et al. v. Maxima Air Separation Center in a tax appeal [33], at p. 964; Civil Appeal 5187/91 Y. Maximov et al. v. T. Maximov et al. and Counter-Appeal [34], at p. 186).  In a number of codifications, this is explicitly stated (see, for example,  Article 157 of the German Civil Code (the BGB), which states that contracts shall be interpreted in faith, in faith and with regard to custom;  Article 1366 of the Italian Civil Code, which states that the contract shall be interpreted in good faith).  In Israel, this is derived from the general principle of good faith in contracts (see D. Pelpel, "Section 39 of the Contracts Law (General Part), 5733-1973 and the Connection to German Law" (1984)