A lessor demanded that the lessee pay the full usage fees imposed upon it by the Israel Land Authority and this in accordance with the lease agreement and after the parties failed to reach an agreement regarding the placement of a loan in favor of the lessee by the lessor.
The Court accepted the lessor's contention and held that a loan agreement was not concluded between the parties due to the lack of contractual intent. For negotiations to result in a binding contract, a contractual intent to enter into an agreement, the main terms of which are known and agreed upon, must exist. Parties’ intention to enter into a contract should be inferred from the external expressions of consent expressed by the parties. Hence, an addition, restriction or change incorporated into the acceptance of the original can not be construed as an external expression of consent but rather constitutes a new offer which requires the other party’s acceptance for a contract to be concluded. Here, the lessee proposed that the loan be settled after exhausting all the appeals, including an appeal to the Supreme Court, while the lessor conditioned the granting of the loan on the continuation that the appeal procedures would be subject to her consent. Therefore, the contractual intent requirement has not been met and the lessee must act according to the rental agreement and pay the full usage fees.