Legal Updates

Following a legal advice – even if later proved wrong – is a defense against contention of negligence

June 22, 2020

A publishing house needed to file a claim for infringement of its copyrights and contracted a financer so that against partial financing of the proceedings it will receive part of the winnings. When some of the lawsuits were rejected and the publishing house decided to appeal only one of such, the financer demanded to appeal the others and demanded compensation for its part of the winning as if the other appeals were accepted.
The Court held that the contract between the parties was not breached because details not specified in the contract could not be completed in the absence of past practice between the parties. Israeli Law stipulates that details not specified in, or under, a contract would be in accordance with the existing practice between the parties. For this purpose, one must demonstrate the existence of a practice between the parties as well as whether the completion of provisions may be deduced from such practice. In addition, it must be ensured that such provision has not been deliberately omitted from the contract or that the contract stipulates a negative arrangement in relation to such provision. The more substantial the matter, the more likely it was deliberately omitted from the contract. Here, the existence of a practice has not been proved because there was a one and only case in which the parties discussed jointly filing an appeal. Also, it appears the subject was deliberately omitted from the contract because it is difficult to ex-ante formulate agreements on the filing of an appeal. Thus, not involving one of the parties in the decision not to file an appeal does not constitute a breach of contract. Additionally, when a non-lawyer follows a legal advice from a lawyer, such cannot be held liable for the outcome of the action even if the advice turned out to be incorrect and therefore the financer can not contend negligence in not filing the appeal.