Procedural Notes
- This proceeding was opened in 2019, more than six years ago, and was mostly conducted before a different panel. Throughout the proceeding, the plaintiff filed motions to amend pleadings, to file supplementary affidavits and to add evidence at a later stage (the last request to add evidence was filed about a week before the date set for the submission of the summaries). It should be noted that these requests stemmed, inter alia, from many and frequent changes in the plaintiff's representation in the proceeding. As a rule, the court granted the plaintiff's requests, in order to clarify the disputes on their merits, and in order to enable the clarification of all of the plaintiff's claims against the defendant in the framework of this proceeding (see, for example, the court's decision of May 12, 2022 in relation to the plaintiff's request to allow split remedies). In any event, the plaintiff's procedural conduct as described above led to the delay and cumbersome investigation of the proceeding.
- After all pleadings and affidavits of the parties were submitted, including the supplementary affidavits, an evidentiary hearing was held before me on December 1, 2024. On behalf of the plaintiff, Mr. Hamami, Mr. David Menashe – a mechanical engineer by training, Mr. Israel Goshen – who served as a project manager for the plaintiff during the period relevant to the lawsuit, and CPA Fenigstein, who, as stated, submitted an opinion on behalf of the plaintiff regarding her damages. On behalf of the defendant, Mr. Kiselowitz and Mr. Shahar Uri testified - Mr. Kiselowitz's son-in-law who served as deputy director general for the defendant.
- The parties have submitted their summaries, and now the time has come to decide the disputes at the heart of the proceeding.
Discussion and Decision
- There are a number of disputes between the parties, as detailed below:
- The Essence of the Agreement - Should the contractual system between the parties be classified as a "development contract" within the meaning of case law, and is the obligation underlying the agreements between the parties a "result obligation" or a "diligence obligation"?
- Breach of the Agreement - Did the defendant provide the plaintiff with the consideration to which it was committed in the agreements entered into between the parties?
III. The Contributory Fault Claim - Is the defendant solely responsible for delays (and even failures) in the production of the machine, or is part of the responsibility placed on the plaintiff, due to non-cooperation, adding requirements throughout the development period and piling up difficulties?
- Remedies and Remedies - Taking into account all the decisions in the above disputes – what remedies is the plaintiff entitled to?
I will discuss the various disputes in their order.
- The Essence of the Agreement
- One of the defendant's main arguments is that the contractual system between the parties should be classified as a "development agreement" – an agreement whose purpose and purpose is to create a new product "out of thin air". Such an agreement, according to the defendant, has unique characteristics, mainly the dynamism that characterizes it and the impossibility of committing in advance to achieving the result. Therefore, according to the defendant, in the framework of "development agreements", the main obligation of the developer is an "obligation to make an effort", i.e., an obligation to take appropriate measures in order to achieve the goal, without undertaking to achieve it (in this context, the defendant referred to the judgment in a civil case (Haifa) 660/03 Philips Medical Systems Technologies in a Tax Appeal vs. Dan Raz in a Tax Appeal [Nevo] (June 23, 2008) (hereinafter: The Phillips Affair)).
- 29. The case law and the literature do indeed distinguish between the "obligation of the outcome" and the "obligation to make an effort" in contractual relations: the obligation to make an effort is essentially a behavioral obligation, and it includes the obligation to act with the professionalism, skill, and diligence that is appropriate to achieve the desired result, but it does not include an obligation to achieve this result. A result obligation, on the other hand, is an obligation that concerns the achievement of a certain result defined in the contract (see: Civil Appeal 2887/91 Gol v. Uriel, paragraph 7 [Nevo] (September 28, 2002); Civil Appeal 7664/00 Avraham Rubinstein & Co. Contracting Company in Tax Appeal v. Holon Municipality, IsrSC 56(4) 117, 132 (2002) (hereinafter: The Rubinstein Matter); Civil Case (Haifa) 382-07 Hochman v. Gordy Projects (1995) Ltd., paragraphs 39-40 [Nevo] (March 3, 2010) (Hereinafter: The Hochman Affair)).
- In general, the question of whether a contract includes a consequence obligation or an effort obligation is decided in accordance with the well-known rules of contract interpretation (see: Gabriela Shalev and Yehuda Adar Contract Law - The Remedies, Towards the Codification of Civil Law 120-118 (2009)).
- The implications of the distinction between a contract that includes a charge of a result and a contract that includes an obligation to make an effort is its effect on determining findings regarding the breach of contract. Thus, while the claimant of a breach of contract that includes Result Billing will be required to prove that the result that was ultimately achieved does not correspond to the result agreed upon by the parties, then the claimant of a breach of the overall contract Obligation to make an effort It will be required to prove that there is a gap between the result achieved and the result that could have been assumed to have been achieved had it not been for the negligence of the violator and if he had acted with proper diligence (see: Civil Appeal 1546/16 Afou Sa'id Bisan v. State of Israel Development Authority and the JNF, paragraph 39 of the judgment of the Honorable Justice A. Stein [Nevo] (16.9.2020); The Hochman Affair, paragraphs 43-45).
- The application of the aforesaid rules to our case leads to the conclusion that the agreement between the parties included Result Billing, and he is not satisfied with the obligation to make an effort as the defendant claims. I am of the opinion that from the language of the agreements between the parties, as well as from the rest of the evidence, it appears that the defendant believed that she knew and could manufacture the machine, even though it was the production of a new product, and that she even undertook to do so – that is, she undertook to manufacture the machine (and not just try to produce it) and supply it to the plaintiff, as detailed below.
- At the outset, I will note that I am willing to assume that, as the defendant claims, the parties entered into agreements for the development of a machine Unique, For the industrial production of the total kit. This fact arises from the language of the agreements, These include provisions from which it can be understood that the parties have agreed on the development of a new product and that this is a secret development (apparently in view of its innovation and the economic potential inherent in it). For example, the agreements include the following conditions:
"The entire line and/or part of it... It will be developed and manufactured exclusively for Kiosk Marketing (2004) in a tax appeal by Lid Technologies Ltd. The sale of the line and/or any part thereof will be (if any) through the 2004 marketing kiosk in a tax appeal or anyone on its behalf only" (paragraph 2 towards the end of the quote for the production of the machine).