the construction. Under these circumstances, it would not be reasonable to assume that in projects for the construction of apartments of the second type, for which the state is obligated to purchase all the apartments from the contractors, a contractor who is late in completing the construction will be exempt without any sanction. After all, the need for a sanction, with regard to projects of the second type, necessitates a leniency.
The learned judge rejected this argument. First, he held that once it was found that the language of the contract leaves no doubt as to the content of the provision of clause 6(h)(3), the intentions of the parties should no longer be relied upon according to external circumstances. Second, he further held that even if the argument had been accepted, it would have been found that the contract was deficient, since then it would have been missing a clause instructing the reduction of the price due to a delay in presenting the contractor's demand. Therefore, it is better to put section 6(h)(3) in its place and interpret it in its plain sense; If, in any case, the State suffers damage as a result of a delay in the construction of such apartments, it will have to sue for compensation for its damages under contract law. Previously, he hinted that a regulation for such cases might also be found for the State in the "Addendum to the Agreement", as to its application to the relations between the State and the Respondent, it was not required, and refrained from, to decide.
The Appeal
- In the appeal before us, the State reiterates its reliance on the argument that clause 6(h)(3) of the programme contract should be interpreted, not according to the language of the clause, nor according to its location in the framework of the wording of the contract, but according to the fundamental and primary purpose of the programme contract as an integrative framework. The purpose of the program contract, the state reiterates and resolves, was to incentivize the contractors to carry out the construction. It is clear that without careful adherence on the part of the contractors to the agreed timetable, this goal will be thwarted. The commercial logic of the program contract requires, therefore, to interpret the provision of clause 6(h)(3) as applying to a case of delay in the execution of the construction. In this regard, section 6(h)(3) should be seen as a parallel to section 6(g): just as section 6(g) entails a reduction from the calculated price due to a delay in the date of completion of the construction of projects of the first type, so section 6(h)(3) entails a reduction from the calculated price due to a delay in the completion of the construction of projects of the second type. And since the damage involved in the delay in completing the construction of apartments in development areas is greater than the damage involved in the delay in completing the construction of apartments in the requested areas, the rate of reduction from the calculated price, which is indicative of section 6(h)(3), is greater than the rate of reduction that section 6(g) indicates.
The main point of departure for this argument is that the language of section 6(h)(3) is not clear, and in any event it can also be interpreted differently than it was interpreted by the learned judge. Alternatively, it was argued that even if it is found that the language of the section is, indeed, clear, even then the purposive interpretation should be preferred over the meaning that arises from the language. Thus, it is necessary (in the opinion of counsel for the State) from the business purpose of the engagement and from the commercial logic, which the parties are presumed to have guided themselves by. In this context, it should be noted that counsel for the State does not dispute the correctness of the learned judge's determination that accepting its interpretive position will leave the State without sanction for the delay on the part of the contractor in presenting his demand for the fulfillment of its undertaking to purchase the apartments.