Legal Updates

Lack of consideration for change of agreement by behavior enables reversion to the original terms but only as of the date of notice

April 18, 2023

A management company that maintains the common areas in a business center in an industrial area in Jerusalem has not demanded management fees for nearly 26 years, despite the existence of a written agreement.

The Court held that the management company is not entitled to receive management and maintenance fees for the past period, due to the waiver in its conduct, but it is entitled to demand the performance of the contract from now on. Waiving a contractual right for an extended period of time may indicate that the parties have changed the agreement between them by their behavior. The longer and more consistent the length of time in which the behavior deviates from the terms of the original agreement, the more it may be concluded that the agreement was changed by behavior. In the event that no consideration was given by the other party for the change, there is no obstacle to allowing reversion to the original contract terms. Here, despite the failure to pay the management fees, the agreement was not terminated and the management company did not assert its rights to receive management fees from 1991 until it claimed its rights for the first time in 2017. No consideration was given for the "change", so the management company may at any time return and assert its rights accordingly to the original management contract, but it cannot assert its rights retroactively, but only from the day of demand and onward.