Companies entered into a share purchase agreement regarding the shares of "Diners." The contract stipulated that the sellers would be entitled to contingent consideration, provided that no stay of proceedings order is issued against "Mega" which is not vacated within 60 days. Following the issuance of such an order against Mega, and despite the Mega’s subsequent recovery and continued operations, the sellers demanded payment of the contingent consideration notwithstanding the contractual condition.
The Court held that the purchaser is not liable for the payment of the contingent consideration, as the plain language of the contract is clear and prevailing. Pursuant to established case law, a contract shall be interpreted according to the parties' intent, as inferred from the contract and the surrounding circumstances; however, where the parties' intent is explicitly reflected in the language of the contract, the contract shall be interpreted according to its terms and there is no need to examine the external circumstances or attempt to trace the subjective intent of the parties. The language of the contract is the starting point for any interpretive process and given clear language that demonstrates the parties' intent at the time of execution, it is granted primacy in the interpretive process. This is particularly true regarding commercial contracts drafted by legal experts with meticulous attention to detail. Here, the parties conducted lengthy negotiations over the draft, were represented by professional teams, and the sellers raised no contentions regarding the language of the contract until the purchaser refused to pay the contingent consideration. Furthermore, the wording of the clause itself is unambiguous, is not easily subject to alternative interpretations, and reflects the parties' desire to hedge their risks. Therefore, there is no justification to obligate the purchaser to pay the contingent consideration and the language of the contract stands.