"In every contract there are obligations that are intended to fulfill the purpose of the engagement between the parties. In the contract before us, the obligation imposed on the buyer to pay the price of the lot and the obligation imposed on the seller to transfer ownership of the plot to the buyer are charges, which are intended to fulfill the purpose of the engagement - the execution of a real estate transaction. However, it is possible that the contract will include obligations of a different type, which are not intended to realize the initial purpose of the engagement (i.e., the execution of the transaction), but are intended to regulate the legal relationship between the parties in the event that the achievement of the initial purpose has been terminated, failed or disrupted. Such are, for example, in the contract before us, obligations relating to agreed compensation, restitution and the manner of payment of these, including the methods of linking them." (Civil Appeal 187/87 Levy v. Deutsch, IsrSC 34(3) 309, 322 (1989)) ("Levy").
(See also Civil Appeal 4162/02 Randor in Tax Appeal v. Dror Engineers (1990) Ltd., IsrSC 58(4) 193, 201 (2004)).
Thus, initial contractual obligations are obligations whose fulfillment is required in order to fully execute the transaction in its original format that the parties envisioned at the time of entering into the contract. On the other hand, secondary contractual obligations are obligations that are not necessary for the realization of the transaction, but rather the law and the parties see them as a necessary result in the event of a dispute relating to the fulfillment of the primary obligations, such as clauses relating to remedies for breach of contract (such as agreed damages, cancellation of the contract and restitution), or clauses related to the manner in which disputes and disputes are resolved (such as jurisdictional, mediation or arbitration clauses). These secondary provisions, which are intended to survive even after the termination of the contract, anticipate the future dispute and therefore become relevant and applicable precisely after the cancellation of the contract due to its breach (Gabriela Shalev and Yehuda Adar, Contract Law - Remedies 553-556 (2009)).
- It should be emphasized that there is no requirement that the agreement itself contain an explicit clarification in relation to each and every provision therein - whether it constitutes a "first-order" obligation or perhaps a "second-order" obligation. In this context, it was held that:
"The fact that an obligation in a contract is an obligation of the first type or an obligation of the second type must be studied, of course, from an examination of the intention of the parties, as formulated in the contract itself and as it is learned from the circumstances." (Levy, at p. 323).