Caselaw

Civil Appeal 4628/93 State of Israel v. Apropim Housing and Development (1991) Ltd. IsrSC 49(2) 265 - part 61

June 4, 1995
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of an appraisal intent.  It is clear that in this way it is not possible to intervene in the terms of the contract if its interpretation, according to the intentions of the parties, indicates an intention that the obligations will not be assessed.  However, the interpretation of the contract, from within it and according to the circumstances of its conclusion, does not indicate such a probable intention, and adherence to nominalist values constitutes a flagrant violation of the balance of mutual interests, which found expression in the terms of the contract or what is learned from the circumstances that existed at the time of the conclusion, the principle of good faith may fill the gap in the contractual stipulation" (Civil Appeal 479/89 [8], supra, at p. 846).

The principle of good faith is not intended to turn a failed arrangement into a proper arrangement.  It comes to fulfill, according to the lines set out in the existing contract, what the parties missed.  He came to restore in its place a "flagrant violation of the balance of mutual interests" (in the words of my colleague, Justice Matza, Other Municipal Applications 479/89 [8], supra, at p. 846), which was created by the existence of the deficiency and its incompleteness.  He did not come to create a new justice between the parties.  It comes to give expression to the contractual justice that the parties have determined.

  1. In this context, these two comments should be made: First, the principle of good faith has various implications for the life of the contract. As appears from my judgment, with regard to the interpretation of the contract, the principle of good faith has three aspects. One aspect is that good faith requires that the contract be given an understanding that is consistent with the common intention of both parties.  The effect of the principle of good faith, in this regard, is on the subjective purpose of the contract (see paragraph 10 above).  The second aspect is that the contract will be given a meaning that is consistent with the basic principles of the system (such as equality).  In this respect, good faith affects the objective purpose of the contract (see paragraph 18

above).  The third aspect is regarding the completion of a deficiency in the contract.  This aspect assumes that the contract is interpreted (taking into account the principle of good faith) and the result of the interpretation is the existence of a deficiency.  Now the principle of good faith appears in another guise, this time in the matter of filling in the gaps.  We are now dealing with this aspect.  This aspect is connected to the general perception that the principle of good faith is not limited only to outlining a proper way to perform contractual obligations, but it also constitutes a source of adding rights and obligations to the existing contract.  "...Section 39 of the Contracts Law may impose on the contracting parties additional duties, the mention of which is not mentioned in the contract itself, but which are required by the need to bring about the fulfillment of the contract in an acceptable manner and in good faith..." (Judgment in the High Court of Justice 59/80 Beer-Sheva Public Transportation Services in Tax Appeal et al. v. The National Labor Court in Jerusalem et al. [66], at p. 836).  And –

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