A developer was 6 months late in delivering an apartment to the purchasers and paid a reduced compensation to the purchasers, following a written settlement signed by the parties in which the purchasers waived all claims regarding the late delivery.
The Court accepted the purchasers claim and held that the settlement agreement is null and void and the developer must pay the full compensation pursuant law. The provisions of Israeli law fulfill a consumer purpose and grant purchasers compensation for late delivery at a fixed rate that cannot be deviated from, except to the benefit of the purchasers. Here, the developer negotiated with the purchasers at the end of which the purchasers agreed to receive compensation at a reduced rate, but subject to a full waiver of claims against the developer. There are inherent power imbalances between the parties, and the developer's actions should be seen as an attempt to give itself a legal advantage at the expense of the purchasers, who had not yet received possession of the apartment and were trying to extract any possible compensation in order to mitigate the damage they incurred due to the delay in receiving the apartment. Therefore, an agreement to receive reduced compensation, even if voluntarily signed, is null and void and the developer must compensate the purchasers for the balance.