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Beit Midrash Series P'ninat Mishpat

Chapter 411

Calculating Late Penalty According to Contract or Law – part III

The plaintiff (=pl) bought property from a building company (=def), which was supposed to complete construction by 20.06.2014. After negotiations, the contract included a penalty of 2,800 shekels a month against def for lateness, starting from two months after the target date. Pl received the apartment more than 18 months late. According to a new law, a buyer is compensated for more than 60 days of lateness (retroactively from the beginning) according to the following schedule – 150% of the apartment’s rental value for the first 8 months; 125% of the value after that. Buyers cannot waive their legal rights. Pl claims that the apartment’s value is 4,200 shekels and claims 105,275 shekels. Def claims the payment should be drastically reduced on two general grounds. Since the contract included an arbitration agreement to beit din, Halacha, which recognizes the sides’ agreement, rather than the law, should be binding. Therefore: 1. The monthly rate is 2,800. 2. Payments start only after two months. 3. The contract gives a two month extension for the buyer’s requesting building changes, which pl did. Furthermore, the following delays, which were beyond def’s control, push off the target date: 4. (Arab) workers could not come to the site during the fighting in the summer of 2014. 5. The water authority illegitimately delayed connecting the water supply, which delayed by months receipt of a Tofes 4, needed for legal occupancy. 6. The fire department improperly delayed approval for several weeks. 7. Pl refused to receive control of the apartment for 42 days after it was ready.
Various RabbisSivan 3 5777
69
Click to dedicate this lesson
(based on ruling 75030 of the Eretz Hemdah-Gazit Rabbinical Courts)
P'ninat Mishpat (576)
Various Rabbis
410 - Calculating Late Penalty According to Contract or Law – part II
411 - Calculating Late Penalty According to Contract or Law – part III
412 - Respect for the Elderly
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Case: The plaintiff (=pl) bought property from a building company (=def), which was supposed to complete construction by 20.06.2014. After negotiations, the contract included a penalty of 2,800 shekels a month against def for lateness, starting from two months after the target date. Pl received the apartment more than 18 months late. According to a new law, a buyer is compensated for more than 60 days of lateness (retroactively from the beginning) according to the following schedule – 150% of the apartment’s rental value for the first 8 months; 125% of the value after that. Buyers cannot waive their legal rights. Pl claims that the apartment’s value is 4,200 shekels and claims 105,275 shekels. Def claims the payment should be drastically reduced on two general grounds. Since the contract included an arbitration agreement to beit din, Halacha, which recognizes the sides’ agreement, rather than the law, should be binding. Therefore: 1. The monthly rate is 2,800. 2. Payments start only after two months. 3. The contract gives a two month extension for the buyer’s requesting building changes, which pl did. Furthermore, the following delays, which were beyond def’s control, push off the target date: 4. (Arab) workers could not come to the site during the fighting in the summer of 2014. 5. The water authority illegitimately delayed connecting the water supply, which delayed by months receipt of a Tofes 4, needed for legal occupancy. 6. The fire department improperly delayed approval for several weeks. 7. Pl refused to receive control of the apartment for 42 days after it was ready.

Ruling: We will deal now with analysis of two of the excuses for delay.
The water utility made an unproven claim against def that they damaged a piece of their infrastructure and refused to continue work until def would pay 75,000 shekels. Def denied any connection to the damage and presented a letter from the municipality supporting their stand and demanding the utility resume work. Although def eventually paid, no evidence disputes their claim that they gave in to blackmail, as the utility damaged them greatly with the delays. Therefore, def is awarded a six-month extension of the target date due to the utility delay.
All agree that pl received keys to the apartment on Jan. 4, 2016. Def sent beit din a copy of an email to pl on Nov. 19, 2015 that the apartment was ready. While pl complained of some flaws in the apartment, the contract (par. 9.7) states that the buyer must accept control of the apartment when fit for living even before all the flaws are fixed. During beit din hearings in July 2015, pl stated that all the serious flaws had been fixed and she was waiting for the Tofes 4. Pl claims that she did not receive the email notification but only a phone call on Dec. 12, 2015 and that when she did a final check on Dec. 20, an interior door was missing, there were objects in an auxiliary room outside the apartment she had rights to, and the inspector was not there. Out of the 42 days in dispute, beit din awards pl 17 days (based on compromise), primarily because the contract states that def must give 14 days notification before giving the key. In general, though, the sides’ claims illustrate that pl was not in a hurry to receive the keys.
The last installment will deal with a halachic consideration about excused lateness.
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