A client filed a claim against Facebook in Herzliya, Israel for damages caused by Facebook due to poor service, but the rules of use states that any claim against Facebook must be governed under California law.
The Supreme Court held that the governing law clause depriving Facebook's consumers, including small businesses that purchased advertising services from it. A standard form contract is a contract whose terms have been dictated in advance by a supplier to an indefinite group of customers. The Israeli law allows the Court to cancel an unreasonable unilaterally privileges if it causes customer deprivation or gives an unfair advantage to the supplier in a way that may result in customer deprivation. However, not everyone who signs a standard form contract with a foreign governing law will be protected as a 'consumer' and a distinction must be made between large and "sophisticated" businesses, with financial strength, relevant experience and expertise and small businesses. Governing a foreign law in a transaction made with an Israeli consumer in Israel results in an unreasonable and unfair advantage for Facebook, which enjoys the huge power gap, especially if the consumer is a private individual or a small business, who is not a “sophisticated” player and cannot know what the foreign law is at the time of the transaction or even when the conflict erupts. However, Court must determine first if the client can be considered a small business and if so, the governing law clause will be canceled and the claim against Facebook will be conducted according to the laws of the state of Israel.