I will first discuss the arguments raised by the appellants, and then those of Ben Shahar.
- One of the considerations on the basis of which the cause of action for breach of contract was rejected, in the words of the learned President on duty, that:
"The fact that they remained in the leased property after April 30, 1971 did not at all cause a breach of the contract between Knopf and Hasid, because it was explicitly agreed between them that if Knopf could not hand over the leased property because of Ben Shahar's failure to vacate it, then Knopf was exempt from liability."
In other words: in his opinion, the exemption from liability that the appellant gave to Knopf at 8/8 is sufficient to omit the basis under the cause of action for the breach of contract.
In my opinion, the president on duty was caught in a legal error in his mindset. An exemption clause in a contract does not necessarily entail the release of a foreigner from his obligation not to interfere with the fulfillment of the contract as it is written. I emphasized the word "necessarily", since it is possible that in an exceptional case, the grantor of the exemption takes upon himself a voluntary risk towards that stranger as well. Such an exception has its own conditions and it needs an explicit argument. It should be said at once that a claim in this spirit - all the more so with appropriate detail - was not raised at all in the case before us.
Let us therefore return to the rule, formulated by Dr. Gabriela Shalev, in her book, "Exemption Clauses in Contracts" (section 222), in the following words:
"... In principle... There is no exemption clause in a contract between two that can affect the array of liabilities and rights of a foreigner."
In the English judgment Torquay Hotel Co. Ltd. V. Counsins and others (1969) 2 Ch. 106, 143, 146, 137; (1969) 1 All E.R. 522 The summary of the facts was as follows:
The Hotel Workers Organization (hereinafter: the "Organization") boycotted a certain hotel because it did not employ the organization's employees because it supported the management of another hotel in its dispute with the organization. The organization's employees exerted pressure on the ESSO fuel company (hereinafter: the "Company") not to supply fuel to the hotel, even though it undertook to do so in a contract with the hotel. The organization's personnel blocked the entrance and did not allow the fuel carriers to pass. The company's contract with the hotel contained an exemption clause according to which neither party shall be held liable for a breach caused by circumstances over which it has no control. The hotel therefore demanded from the organization the benefit of the damage caused to it due to the non-supply of fuel. The organization's defense argument was that by virtue of the exemption clause, the contract between the company and the hotel was not breached at all, and therefore in any case the tort of causing its breach was not committed. The majority opinion was that the company did breach the contract when it did not supply the fuel and that the exemption clause only released it from paying compensation for the damage resulting from that breach. In this spirit, Lord Russell says (on page 143 opposite the letter E):