Legal Updates

Representation that were not included in a contract may be deemed waived

June 10, 2024

Two experienced businessmen, who entered into an agreement to separate their assets, discovered that representations presented to each of them by the other party regarding the company that passed into his possession, prior to the execution of the separation agreement, but were not put into the agreement are incorrect.

The Court rejected the mutual claims of the parties due to the lack of deception. The starting point when interpreting a contract is its wording, which has a significant weight in forming the parties' will. In a business contract between parties that are sophisticated enough to use the legal rules in order to design the contract as they wish, the wording of the contract must be given a decisive status and thus allow sophisticated parties to design the contract as they wish and help create contractual certainty. Here, it is a separation agreement drawn up by experienced and well-represented parties and against the background of a long legal dispute. Hence, the wording of the separation agreement, which includes mutual representations by the parties regarding an examination of the state of the joint company that passes to the ownership of each of them, means that those 'representations' which the parties chose not to include in the agreement are not legal representations and consequently it is not possible to claim deception regarding these.