Legal Updates

A settlement agreement executed due to a mistake will not be revoked if such revocation does not align with equity considerations

April 18, 2021

An employee of the Ashdod Port and the Port reached a settlement under which it was determined that the Port will pay the employee ILS 20,000 for wage differences in exchange for full and complete waiver of all claims against the Port. About 4 months later, the employee requested to revoke the settlement agreement on the grounds that he did not intend to waive his demand for payment of pension which was submitted before the entry into the settlement agreement.

The Labor Court dismissed the claim and held that the employee may not revoke the settlement agreement. A fundamental condition for the creation of a contract is the intent to enter into a specific contract. However, not every discrepancy means that the parties lacked such intent. Therefore, when one contends to such discrepancy, the parties' intent will be examined according to the circumstances of the specific contract, when the revocation of a contract which was executed due to a mistake may still be subject to equity considerations. Here, the parties entered into the settlement agreement escorted by attorneys and it was given validity by the Court. In addition, the agreement, which was requested to be revoked only about 4 months after its execution, included an explicit clause of full and complete waiver of all employee claims and the employee did not object to its wording. Thus, the interpretation of the agreement as well as equity considerations do not justify the revocation of the settlement agreement.