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Published online by Cambridge University Press: 16 February 2016
In connection with section 27 of the Contracts (General Part) Law of 1973, Prof. D. Friedmann has dealt with the nature of the conditional contract. In his view a conditional contract is complete, valid and effective, and only differs from an absolute binding contract in its contents.
One reason for that he finds in the fact that section 27 does not appear in Chapter One of the Law, which treats of the making of a contract, or in Chapter Two, that deals with avoidance of a contract because of a defect in its making, but in Chapter Three, that is concerned with the form and contents of a contract.
To make a contract subject to a condition is certainly not a defect in its making. But the location of section 27 does not of itself yield any of Prof. Friedmann's conclusions. Chapter Three covers contracts which are illegal and therefore invalid (section 30, a propos illegal or immoral contracts, or contracts contrary to public policy) or are at all events void (contracts lacking form ad substantiam, falling within section 23) or contracts that are not enforceable by specific performance or actionable in damages (gaming, betting and lottery contracts, under section 32) or are unjusticiable (contracts for giving marks and the like, regulated by section 33).
1 27 L.S.I, 117, hereafter called the General Contracts Law. Sections mentioned in the text without further indication refer to sections of this Law. Sec. 27 reads as follows:
“Conditional contract.
27. (a) A contract may depend on the fulfilment of a condition (hereinafter referred to as a ‘suspensory condition’) or may cease upon the fulfilment of a condition (hereinafter referred to as a ‘resolutory condition’).
(b) Where a contract requires the consent of a third party or a licence under any enactment, the receipt of such consent or licence is presumed to be a suspensory condition.
(c) Where a contract is subject to a suspensory condition, each party is entitled to relief to prevent its breach even before the condition is fulfilled.”
2 Friedmann, D., “Conditional Contract Under Sec. 27 of the Contracts Law”, (1982) 9 Iyune Mishpat 578Google Scholar.
3 Ibid., at 578.
4 Ibid., at 578.
5 Sec. 28 reads as follows:
“Frustration 28. (a) Where a contract is subject to a suspensory condition and of condition, one party prevents fulfilment of the condition, such party is not entitled to rely on the non-fulfilment.
(b) Where a contract is subject to a resolutory condition and one party causes fulfilment of such condition, such party is not entitled to rely on such fulfilment.
(c) The provisions of this section shall not apply where the condition is something that according to the contract a party is at liberty to do or not to do or where a party does not prevent or cause the fulfilment of the condition wilfully or negligently.”
6 Here and below, wherever appropriate, reference to the fulfilment of a ((suspensory) condition includes the non-fulfilment of a resolutory condition.
7 See the survey of Schwartz, A.B., “Bedingung” in Rechtsvergleichendes Handwörterbuch f. d. Zivil u. Handelsrecht (ed. Schlegelberger, F.) Vol. II (Berlin, 1929) 414Google Scholar.
8 To the contrary, see Zeltner, , The Law of Contracts in the State of Israel (1974, in Hebrew) 132Google Scholar: “the transaction is not complete”.
9 Gulak, A., The Elements of Jewish Law, Vol. I, (Berlin, 1923, in Hebrew) 80–81Google Scholar. See also Warhaftig, Sh., The Jewish Law of Contract (Jerusalem, 1974, in Hebrew) 138Google Scholar.
10 Zeltner (n. 8 above), at 133, appears to think the same: “an effectual agreement between the parties”; notwithstanding his statement, cited in n. 8 above.
11 Sec. 27 does not lay down whether fulfilment of a condition operates retroactively. On this matter different legal systems vary. (See in favour of retroactivity Art. 1179 of the French Civil Code and, in favour of the opposite, Art. 158 of the German Civil Code). We incline to interpret the silence of sec. 27 as indicative of non-retroactivity. One consideration for so doing is that, generally, where the force of a provision is in doubt, one should adopt an interpretation that is less far-reaching. Again, in those laws that adopt the rule of retroactivity it is as well that there should be some limitation regarding cases where it is not appropriate (see, e.g., Art. 1360 of the Italian Civil Code). In any event retroactivity will apply also in Israel if the parties so stipulate.
12 Cohen, N., Interference with Contractual Relations (Tel Aviv, 1982, in Hebrew) 147Google Scholar, seems to overlook this consideration.
13 (1981) (IV) 35 P.D. 771, 778.
14 Cf. Rabello, , The Gift Law, 1968, in Commentary of the Law of Contracts (1973, in Hebrew) para. 56, p. 93Google Scholar.
15 Cf. Barak, J. in Berkowitz v. Kaliman (1982) (IV) 36 P.D. 57, 62–63Google Scholar.
16 25 L.S.I. 11, hereafter called the Remedies Law.
17 Cf. Staudinger's, Kommentar z.BGB (12th ed., 1980) vol. I, para. 158, p. 596Google Scholar. In France, however, Colin, et Capitant, , Traité de droit civil, refondu par Jullot de la Morandiere, (1959) vol. II, p. 937Google Scholar, hold that a conditional creditor can stop time from running against him.
18 The matter has not been dealt with in Israel but the considerations in Bank Leumi v. Feuchtwanger (1957–58) 15 P.M. (Summaries) 87 regarding a declaration of future rights are in point for a positive solution. For other countries, see expressly Enneccerus-Nipperdey, , Allgem. Teil d. Būrg. Rechts (15th ed., 1960) vol. II, para. 197, p. 1202Google Scholar; Betti, E., Teoria gener. del negozio giuridico (Torino, 1952) 539Google Scholar.
19 On the assignment of a conditional debt, see sec. 1 (b) of the Transfer of Obligations Law, 1969 (23 L.S.I. 277).
20 Sec. 7(a) of the Land Law, 1969 (23 L.S.I. 283).
21 Zeltner, op. cit. (n. 8 above) pp. 130–31. He speaks of “a conditional registration” but the point is not a conditional registration but registration of a conditional transaction which is the substance of the registration, just as assignment is the substance of the transaction.
22 See Art. 925 BGB. The prohibition does not apply to a condition of law. In the preparatory work of the Code, the first commission suggested to introduce the prohibition in respect of suspensory and not resolutory conditions (see paras. 870–71 of the First Proposal): see Wolff—Raiser, M.Sachenrecht (1957) para. 61, p. 212–13Google Scholar.
23 See Art. 12 of Eidgenossische Grundbuch Verordnung, Art. 854 of the Civil Code and Art. 217 of the Obligations Code.
24 See Ehrenzweig, , System d. österreichischen Privatrechts (Wien, 1957) vol. I, paras. 223 III, 232, 239 IIGoogle Scholar.
25 See Arts. 951, 952, 1659 et seq. of the French Code; Planiol, & Ripert, , Traité prat. de droit civil, vol. III (Picard, 1952), p. 233Google Scholar.
26 Kent, , Commentaries on American Law (Boston, 1896) vol. IV, p. 122Google Scholar; Cheshire, and Burn, , Modern Law of Real Property (13th ed., 1982) pp. 284, 345 and 436Google Scholar.
27 See, for instance, Art. 2661 et seq. of the Argentine Code; Art. 733 et seq. of the Chile Code; and Art. 648 of the Brazil Code.
28 See there also reg. 9(b) (5) of the Land (Management and Registration) Regulations, 1969 (as amended in 1972) which prescribes that an application for registration shall be accompanied by the consent of the third party to the effectuation of the transaction, where such consent is “required under law or according to a condition that served as a basis for a previous transaction”. See also reg. 62 which enables the registration officer to cancel an entry if satisfied that the registered right has ceased to exist by reason of the event prescribed in that behalf.
29 Sec. 6(d) of the Succession Law, 1965 (19 L.S.I. 58).
30 Sec. 2 (I) of the Debt (Assignment) Ordinance, 1928.
31 According to the information obtained by Mr. Avner Berger from the Land Registry in Jerusalem, the practice is not to register conditional sales but only other conditional transactions (gifts, mortgages, tenancies). In such cases, a note is entered on the Land Register that conditions exist, and anyone wishing to acquaint himself of the terms of these conditions can inspect the file. Until the condition is fulfilled, no further transfer will be registered. According to the information obtained in Tel Aviv by Adv. Michal Gutman, there they don't even register conditional tenancies and mortgages.
32 See Art. 114 of the Ottoman Land Code, 1858 (as amended in 1886) and Katz v. Harari (1962) 15 P.D. 1337.
33 See reg. 62 cited in n. 28, supra.
34 This was by implication affirmed in Kon v. Hasson (1981) (III) 35 P.D. 611, where the application of sec. 34 was denied but only because the assumption of that section was absent.
35 See sec. 1(b ) of the Pledges Law, 1967 (21 L.S.I. 44). See also sec. 1(a ) of the Transfer of Obligations Law, 1969: transfer by way of charge. (For the interpretation of this, see the differing views of Sussmann, J. in (1975) 30 HaPraklit 169, 170Google Scholar; to the contrary Ben-Porat, J., The Transfer of Obligations Law, 1969 in Commentary of the Law of Contracts (1972) 14Google Scholar, and Weisman, , The Pledges Law 1967, in Commentary cit. (1974) 48 et seq. 54–55Google Scholar, and in Lectures for Judges (Jerusalem, 1976, in Hebrew) 21–22Google Scholar.
38 We assume that in sec. 6 of the Unjust Enrichment Law, 1979 (33 L.S.I. 44) “the matter in question” is, in accordance with the title of the Law, “the benefit” and not necessarily “the restitution” in particular. The Law will not seem to apply where an act that constitutes a “benefit” comes under the provisions of another Law, which are special in comparison with the potentially very wide scope of this Law. In the light of this interpretation we have already in “Aspects of Unjust Enrichment” (1981) 11 Mishpatim 385, 404Google Scholar critically examined the opposite assumption made by Prof.Friedmann, in his note on “Building on Another's Property— Principles of Interpretation and the Law of Unjust Enrichment” (1980) 7 Iyune Mishpat 711Google Scholar. Prof.Friedmann, has now replied in his The Law of Unjust Enrichment (1982, in Hebrew) pp. 30–31Google Scholar, arguing that we have fallen into error and that, had the Law intended the regulatory system that commends itself to us, there would have been no difficulty in expressing this in clear terms, saying explicitly that no action should lie under the Unjust Enrichment Law against a person responsible for a breach of contract or tort—as if the fact that the legislature did not follow the course of particularisation and explanation were contrary to our interpretation and in favour of his. The usual course of the Israeli legislature is, however, to make provision in general and often also in somewhat vague terms and not to go into the relevant instances in detail, lest a casus omissus occurs. On the present question, had the course suggested by Friedmann been pursued, it would not have been enough to refer to cases where provisions regarding restitution exist and where the relationship between “beneficiary” and “benefactor” is regulated by the rules concerning breach of contract and tort, since there are other cases that merit attention in the application of sec. 6, such as the one dealt with by sec. 48B of the Civil Wrongs Ordinance (under sec. 165 of the Land Law, 1969). There is also occasion for bearing in mind that future legislation can always supply other cases for the application of sec. 6. Instead of creating a revolution in our law—as Friedmann thinks—our interpretation moderates, more than his, the drastic changes made by the Unjust Enrichment Law (according to our observation in the above-cited article, at p. 401). It would seem that sec, 6 is inspired by such moderation.
37 As against this, see Cohen, op. cit. supra n. 12 at 146.
38 In favour of the right, see e.g. Enneccerus-Nipperdey, op. cit. supra n. 18, at para. 197, pp. 1199–1200; Colin et Capitant, loc. cit. supra n. 17. To the contrary, see Betti, op. cit. supra n. 18, at p. 538; Flume, W., Allg. Teil d. Bürg, Rechts (3rd ed., 1979) Vol. II, para. 39–3, pp. 709–10CrossRefGoogle Scholar.
39 16 L.S.I. 106. Sec. 7 reads as follows:
“Acts requiring 7. A legal act of a minor shall require the approval of the approval by Court whenever such approval would be required if the act the Court. were performed by his representative; and such act shall be of no effect until it has been approved by the Court.”
40 Englard, Y., The Capacity and Guardianship Law, 1962, in Commentary of the Law of Contracts (1972) para. 28, pp. 58–59Google Scholar.
41 See ibid., Supplement, 1978, p. 13.
42 Sharf v. Aber (1980) (III) 34 P.D. 178, 190.
43 Ibid., at pp. 581–82.
44 See further Part 6 below.
45 Atiyah as well (Atiyah, P.S., Introduction to the Law of Contract (1961) pp. 99Google Scholaret seq. (2nd ed., 1971, p. 121) in the passage cited by Englard refers only to contractual conditions (a conditional contract is inoperative).
46 Savigny, , System des heutigen Röm Rechts (1840–1849) vol. III, p. 123Google Scholar.
47 See Zakai v. Pollak 19 Pes. 201; Moskovitz v. Pappo, 22 Pes. 329; Hartenstein v. Hartenstein, 23 Pes. 22. Other judgments are somewhat more moderate, for instance Hachshara v. Kopika, 5 Pes. 378; Shemuel v. Israel (1960) 14 P.D. 1642, 1644. The way to save a contract from being invalid by stipulating a condition is barred from parties who know from the outset that a licence is unobtainable: Mifal Mivtza v. Avgad (1979) (III) 33 P.D. 714.
48 Ibid., at p. 582.
49 In the U.S.A. as well, in such instances any assumption about the existence of a condition has been negatived: Barcroft Woods Inc. v. Francis, 111 S.E. 2d 512; 201 Va. 405; 17 A.C.J.S. 585.
50 For further grounds for interpreting the provision in this way, see the present writer, “Contract Performance Requiring Consent of a Third Party and Estate Agent's Commission” (1979) 32 HaPraklit 296Google Scholar. Apparently no distinction is made between what is required for the validity of a contract and what is required for carrying it out in Mediterranean Automobile Agency v. Kraus (1977) (III) 31 P.D. 695 and in Ben-Haim v. Cohen (1980) (I) 34 P.D. 564, 568–69.
51 See Godanski v. “Mugsham” (1982) (III) 36 P.D. 533, 539; Ampa v. Ros Carmel (1979) 33 P.D. 29, 32; Hok v. Shamir (1982) (I) P.M. 353.
52 See Hok v. Shamir, ubi supra.
53 Both England and Friedmann agree that a contract for which, according to sec. 20 of the Capacity and Guardianship Law, it is a condition precedent to obtain court approval is not a conditional contract. See Englard, , “The Powers of the Guardian to Represent the Protected Person and Court Approval”, (1978) 5 Mishpatim 479, 482Google Scholar; Friedmann, supra n. 2 at 582. On the other hand, Friedmann, notwithstanding that he holds that a contract made contrary to sec. 20 is invalid, writes (at p. 578) that “an effective contract will be created ‘on condition’ that court approval is given.” This appears to be inconsistent with the requirement of the Law. If approval is given after the contract has been made, the parties must make a new contract.
54 Oertmann, P., Die Rechtsbedingung (conditio iuris) (Leipzig, 1924)Google Scholar.
55 Cariota-Ferrara, , Il negozio giuridico nel dir. ital. (Napoli, 1948) 636Google Scholaret seq.
56 Rubino, , La fattispecie e gli effetti giuridici preliminari (Milano, 1939)Google Scholar; 56 et seq.
57 Falzea, , La condizione e gli elementi dell'atto giuridico (Milano, 1941)Google Scholar; Scialoja, A., “Condiz. volontaria e condiz. legale”, in Saggi di vario diritto (Roma, 1927) 13Google Scholar.
58 Enneccerus-Nipperdey, op. cit. supra n. 18, at para. 194, pp. 1186–87; Larenz, K.. Allg. Teil d. deutschen Bürg. Rechts (2nd ed., 1972) para. 25, p. 415Google Scholar; Rescigno, P., “Condizione” in Encicl. d. dir., vol. VIII, pp. 771Google Scholaret seq. Flume is sharply critical of Oertmann in arguing that no one problem exists regarding conditions of law (that is, there are only questions about different conditions of law): W. Flume, op. cit. supra n. 38, at para. 38–1, p. 680.
59 Cf. Enneccerus-Nipperdey, op. cit. supra n. 18 at para. 196, p. 1197; Flume, op. cit. supra n. 38, at para. 401, pp. 721–22.
60 Ibid., pp. 581–82.
61 (1982) (III) 36 P.D. 421.
62 Ibid., at p. 428.
63 Ibid.
64 Ibid., at p. 430.
