The Court: an Unsigned Contract with a Logistics Services Supplier Is Binding - Israel
March 9, 2011 By Gill Nadel Law Offices
From time to time, disputes rise between sides who do not regulate their relations in a written contract. Situations like these reach the courts for settlement, and for the court’s ruling on a complex question regarding the very core of the relations formed between the parties.
A decision recently issued by the Magistrate's Court of Rishon L'Tzion on a dispute between a logistics company and an importer illustrates how the court confronts this issue.
A disagreement arose between two sides regarding a remaining debt which accumulated and was yet to be paid. The existing debt invoked its creditor, the logistic company, to invoke its right of lien and not distribute the merchandise to the agreed location in Israel, until the debt was completely covered. On the other side, the importer claimed that there was no agreement regarding the sum of the charges, and the logistics company had no legal justification to invoke the right of lien.
The logistics company supported the claim with a quote it had prepared. This quote was drafted during a formal meeting between the sides, which ended with the formation of an updated quote in which all agreed arrangements were included; and based on it the parties began the cooperation between them.
The logistics company claimed that, widespread activity began between the parties, activity that steadily increased thanks to the satisfaction of the importer, who even approved placing a representative of the logistics company on its premises, in order to ensure that the process of loading the goods, the deadlines, and the distribution of the goods will all be met according to the planned criteria.
The logistics company further claimed that soon after the beginning of the agreed activities, the importer sold his trucks, which were used on a daily basis to distribute his goods, and that this reflected his satisfaction with the quality of service he received from the logistics company.
Further more the logistics company claimed that the invoices presented to the importer had been fully approved by his operations manager, in a way that testifies that the charged bill was correct and that an orderly contract did indeed exist between the parties, even if no express contract was signed.
The importer, on his part, claimed that the absence of a signed contract demonstrated that the parties never reached any agreement regarding the cost of the services given to the importer, not to mention that such an agreement would first need to be authorized by the CEO and no one else, no matter what their status in the organization.
Regarding the existence of a binding contract between the parties- the court fully accepted the stance of the plaintiff, even though no written contract regulating the relations between the two parties was presented. The court ruled that the quote given to the importer, the discussions which took place before the activity began, and certainly the beginning of the distribution in small volumes, not to mention their expansion to greater dimensions, all these testified that a contract between the parties concerning their conduct with each other was indeed formed.
Regarding the invoking of the right of lien by the logistics company, the court ruled that there is a direct connection between the held property and the promised debt. The court relied on paragraph 19 to the Law of Contracts (Remedies for Breach of Contract), under which the injured party may invoke a right of lien and detain the property if payments towards it were not paid by the breaching party, and ruled that there is nothing preventing one from holding a property or any right when a debtor disputes the debt, and certainly when the debtor notifies that person he has no intention of paying the debt.
CA 4734-07 Pick Up Center for Logistics and Conveying Ltd. v. Moshe Shaltiel Ltd. Decision given 18.3.10. For the logistics company, Adv. Limor Bibi Maman, for the importer Adv. Doron Ratzbabi.
ABOUT THE AUTHOR: Adv. Gill Nadel
Gill Nadel - Born in Israel in 1969, graduated from Bar Ilan University&s Faculty of Law (cum laude) and from the Department of Musicology. He also has a master&s degree in law from the same institution. Member of the Israel Bar since 1999. Speaks Hebrew, English and Polish. Fields of expertise: Commercial and Business Law, International Trade Law, Import and Export Law, Intellectual Property Law, Maritime and International Forwarding Law, Litigation and Court Representation. Adv. Nadel serves as a teaching assistant of Dr Arie Reich of Bar Ilan University, an international trade law specialist. Adv. Nadel provides lectures on international trade law and import and export law to in courses organized by the Bar Ilan University Center for Commercial Law, Israel Bar, Israel Chambers of Commerce, Manufacturers Association of Israel, Israel Export Institute, Customs Brokers Association, International Forwarders, and more.
Copyright Gill Nadel Law Offices
More information about Gill Nadel Law Offices
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
A disagreement arose between two sides regarding a remaining debt which accumulated and was yet to be paid. The existing debt invoked its creditor, the logistic company, to invoke its right of lien and not distribute the merchandise to the agreed location in Israel, until the debt was completely covered. On the other side, the importer claimed that there was no agreement regarding the sum of the charges, and the logistics company had no legal justification to invoke the right of lien.
The logistics company supported the claim with a quote it had prepared. This quote was drafted during a formal meeting between the sides, which ended with the formation of an updated quote in which all agreed arrangements were included; and based on it the parties began the cooperation between them.
The logistics company claimed that, widespread activity began between the parties, activity that steadily increased thanks to the satisfaction of the importer, who even approved placing a representative of the logistics company on its premises, in order to ensure that the process of loading the goods, the deadlines, and the distribution of the goods will all be met according to the planned criteria.
The logistics company further claimed that soon after the beginning of the agreed activities, the importer sold his trucks, which were used on a daily basis to distribute his goods, and that this reflected his satisfaction with the quality of service he received from the logistics company.
Further more the logistics company claimed that the invoices presented to the importer had been fully approved by his operations manager, in a way that testifies that the charged bill was correct and that an orderly contract did indeed exist between the parties, even if no express contract was signed.
The importer, on his part, claimed that the absence of a signed contract demonstrated that the parties never reached any agreement regarding the cost of the services given to the importer, not to mention that such an agreement would first need to be authorized by the CEO and no one else, no matter what their status in the organization.
Regarding the existence of a binding contract between the parties- the court fully accepted the stance of the plaintiff, even though no written contract regulating the relations between the two parties was presented. The court ruled that the quote given to the importer, the discussions which took place before the activity began, and certainly the beginning of the distribution in small volumes, not to mention their expansion to greater dimensions, all these testified that a contract between the parties concerning their conduct with each other was indeed formed.
Regarding the invoking of the right of lien by the logistics company, the court ruled that there is a direct connection between the held property and the promised debt. The court relied on paragraph 19 to the Law of Contracts (Remedies for Breach of Contract), under which the injured party may invoke a right of lien and detain the property if payments towards it were not paid by the breaching party, and ruled that there is nothing preventing one from holding a property or any right when a debtor disputes the debt, and certainly when the debtor notifies that person he has no intention of paying the debt.
CA 4734-07 Pick Up Center for Logistics and Conveying Ltd. v. Moshe Shaltiel Ltd. Decision given 18.3.10. For the logistics company, Adv. Limor Bibi Maman, for the importer Adv. Doron Ratzbabi.
ABOUT THE AUTHOR: Adv. Gill Nadel
Gill Nadel - Born in Israel in 1969, graduated from Bar Ilan University&s Faculty of Law (cum laude) and from the Department of Musicology. He also has a master&s degree in law from the same institution. Member of the Israel Bar since 1999. Speaks Hebrew, English and Polish. Fields of expertise: Commercial and Business Law, International Trade Law, Import and Export Law, Intellectual Property Law, Maritime and International Forwarding Law, Litigation and Court Representation. Adv. Nadel serves as a teaching assistant of Dr Arie Reich of Bar Ilan University, an international trade law specialist. Adv. Nadel provides lectures on international trade law and import and export law to in courses organized by the Bar Ilan University Center for Commercial Law, Israel Bar, Israel Chambers of Commerce, Manufacturers Association of Israel, Israel Export Institute, Customs Brokers Association, International Forwarders, and more.
Copyright Gill Nadel Law Offices
More information about Gill Nadel Law Offices
View all articles published by Gill Nadel Law Offices
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
