Caselaw

Civil Appeal 4628/93 State of Israel v. Apropim Housing and Development (1991) Ltd. IsrSC 49(2) 265 - part 45

June 4, 1995
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" (Justice Dorner); Civil Appeal 5597/90, 5607[24], at p. 218: "There are no commentators...

a contract based on the subjective, internal intention of a party to the contract, but on the basis of the external disclosure of the joint intention of the two parties" (Justice Dorner)).  Therefore, if the (subjective) intentions of one of the parties are different from that of the other, there is no possibility of formulating a common subjective intention.  The contract will be interpreted in this case, as well as in other cases in which the common subjective intentions are not relevant to the solution of the interpretive problem before the judge, according to its objective purpose.  The objective purpose of the contract is the objectives, interests and purposes that a contract of the type or type of contract that is concluded is intended to be fulfilled.  The objective purpose is deduced from "the nature and essence of the transaction that was entered into between the parties..." (Judge Bach Other Municipality Motions 552/85 [13] supra, at p. 245; Civil Appeal 196/87 Schweiger v. Levy et al. [45], at p. 20).  This is "the common sense of reasonable and decent businessmen..." (Justice Cheshin, Other Municipality Applications 5795/90 [4], supra, at p. 819).  Indeed –

"This objective purpose is concerned with the typical purpose that takes into account the customary interests of fair parties to contractual treatment.  It is learned from the type of agreement and the type to which it belongs.  It is derived from his logic.  It is deduced from his language" (Judgment of Other Municipal Applications 779/89 Shalev v. Sela Company to Trust in Tax Appeal [45], at p. 228).

This is an objective test.  It is influenced by the principle of good faith and the system of values it expresses.  It is derived from considerations of logic (see Civil Appeal 226/80 Kahan et al. v. State of Israel [47], at p. 471) "That interpretation should be preferred, which, more than the other interpretation, is consistent with logic..." (Justice D. Levin); Civil Appeal 702/80 B. Gelfenstein v. Y. Avraham et al. [48], at p. 119 ("The plausible interpretation must be preferred over the interpretation, which leaves no possibility of the performance of the contract not only as it is written and worded, but also according to its spirit" (Justice Sheinbaum)).  When the contract has an economic or commercial purpose, the objective purpose is determined according to "economic logic" or "commercial logic" (see: Civil Appeal 757/82 Israel Electric Corporation in Tax Appeal v. Davidovich [49], at p. 232; Civil Appeal 5657/85 Gad v. Nabiei et al. [50], at p. 430; Civil Appeal 5559/91 [33] supra, at p. 649).  The objective purpose was determined according to considerations of reasonableness (see: Civil Appeal 449/89 Fluke et al. v. Wright [51], at p. 102: "...The more reasonable interpretation of the policy should also be chosen..." (Justice Maltz); Civil Appeal 2738/90 Yahav v. Ben Tovim et al. and Counter-Appeal [52], at p. 037; Civil Appeal 5597/90, 5607[24], supra, at p. 219: "... A commercial contract is intended to achieve a business purpose, and it must be interpreted as fulfilling that purpose, as reasonable people would..." (Justice Dorner); Civil Appeal 530/89 Discount Bank v. Mary Nofi et al. [53], at p. 125); In formulating the objective purpose, consideration must be given to business efficiency, as well as considerations "as fair parties, who protect the typical interests, shape it" (Civil Appeal 779/89 [46], supra, at p. 229).  "This is a purpose that reasonable and fair parties would aspire to achieve" (Justice Or, ibid., at p. 237).  The (final) purpose of the contract is formulated on the basis of the subjective purposes ("the intentions of the parties") and the objective purposes of the contract.  However, in the clash between them, the subjective purpose ("the intention of the parties") has the upper hand.  This, as we have seen, is the main message that arises from the provision of section 25 of the Contracts (General Part) Law.  Moreover, within the framework of the subjective purpose, normative preference is given to the intention that arises from the ordinary and natural language of the contract, over the intention

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