Legal updates

When addressing a commercial agreement executed between two “returning players” its wording will trump

March 3, 2021

Tabula Com. Ltd. and Walla! Communications Ltd. entered into a cooperation agreement, which stipulated that Walla! may terminate the agreement at any time and for any reason, subject to the payment of liquidated damages. Due to loss of trust between the parties, Walla! unilaterally terminated the agreement.
The Court held that the agreement was duly terminated because the wording of the agreement specially enables this. Israeli law stipulates that if the intention of the parties at the drafting of the agreement is explicit from its wording, then the agreement will be construed in accordance with its wording. Such approach is applied mostly with commercial agreements, i.e., agreements which terms are clearly defined, are drafted in detail by experienced lawyers and are executed between "returning players" (parties that repeatedly execute agreements between them) who invest a significant amount of time in drafting the agreement and are aware of the applicable construction rules. Giving dominant weigh to the wording in such cases helps create stability and contractual certainty, as it allows sophisticated and legally well-represented parties to shape their contractual engagement as they wish, using the wording wisely and carefully. Here, the parties, two experienced telecommunications companies entered into a commercial agreement, which entails explicit wording regarding Walla!’s right to terminate the agreement at any time and for any reason subject to liquidated damages. Accordingly, Walla! was entitled to terminate the agreement.