- CS 45359-05-11
- Jerusalem District Court
- Haim Levy (Jerulasem Vehicle Agency and District Car Repair) 1998 LTD. vs. Karas Motors LTD.
LONG-TERM CONTRACTS - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET AND SUPPLEMENT APPLICABLE DOMESTIC LAW (ISRAELI LAW)
CONTRACT FOR INDEFINITE PERIOD - RIGHT OF EITHER PARTY TO TERMINATE BY GIVING NOTICE A REASONABLE TIME IN ADVANCE - REFERENCE TO ARTICLE 5.1.8 UNIDROIT PRINCIPLES
(Excerpt from English translation)
"It should be mentioned that the rule that it is possible to terminate legal connection set in a long-term contract which does not set a date of termination, by a unilateral notice, as long as it was given a reasonable time in advance, is common to many of the legal systems.
As illustration we can refer to Art. 5.1.8 of the 3rd edition (2010) of the UNIDROIT Principles of International Commercial Contracts, as well as to Principles of European Contracts Law. These two texts reflect legal approaches common to many legal systems around the globe. Rules of the UNIDROIT are used in many arbitrations as rules which unify international contracts and commercial law, and as testing for legal approaches, which allow to examine local legal arrangements".(*)
(*) Cf.) Francois Dessemontet, "Use of the UNIDROIT Principles to Interpret and Supplement Domestic Law", ICC Int. Ct. Arb. Bull., special suppl. 39 (2002); Gerard
McMeel, "The Construction of Contracts“ (Oxford, 2007); Michael Joachim Bonell, "International Investment Contracts and General Contract Law: a Place for the UNIDROIT Principles of International Commercial Contracts?" Uniform Law Review 144 (2012). The Court also lists the literature regarding the actual use of rules in different countries of the world and specifically points at the book: “The UNIDROIT Principles 2004: Their Impact on Contractual Parties, Jurisprudence and Codification” (E. Cashin Ritaine & E. Lein (ed.), (2007) and to Michael J. Dennis "Modernizing and harmonizing international contract law: the CISG and the UNIDROIT Principles continue to provide the best way forward" 19 Unif. L. Rev. 114 (2014).
"National courts have at times made use of the Principles as equal in value to research literature. But sometimes courts use them as a "breaker of balance", as a final word to make a decision between different opinions expressed in the literature [here comes an example from a UK case, Square Mile Partnership Ltd v Fitzmaurice McCall Ltd (2006)]".
"According to these texts (UPICC and PECL), a party to a long-term contract (for an undefined term) may unilaterally end the agreement, if they provide a notice reasonable time in advance. … A contract for an indefinite period may be ended by either party by giving notice a reasonable time in advance".
"In this regard it was decided that the length of the reasonable time period shall be set according to the specific circumstances of the case (see the general introduction to UNIDROIT Principles, page 159). It seems, therefore, that the concept that a party to a contract with no end date can terminate it with reasonable notice, reflects what is common in many parts of the world, including in international business of commerce.“