Conditions of the Leasing of a Community Supermarket | Beit Din Eretz Hemda - Gazit | Beit Midrash

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Case: The defendant (=def) won a tender to run the local supermarket in a yishuv (= the plaintiff =pl). The store’s previous operator (=po) refused to leave until he would be paid 450,000 NIS for the appreciation in the store’s value (monitin) during his tenure. During negotiations, po’s claims became appreciated, and def paid po at pl’s urging. Subsequently, pl and def drew up a new agreement, compensating def, with different terms depending on how long def remained, but not enabling him to receive monitin. For some reason, the new agreement signed was not the final draft that the sides had shared. Years later, pl demanded of def to vacate the store, and since he refused to move out in a timely manner, charged him $100 a day as a penalty as prescribed in the contract. Def argues that the waiving of the right of payment for an increase in monitin should not be valid, considering def agreed to pay po for it. Although draft agreements after the payment still contained that clause, def claims he did not sign them for that reason. Although def ended up signing such an agreement, def claims to have done so by mistake because of the agreement’s focus on the update in the rental rates and because a representative of pl tricked him by promising to provide benefits for def, such as the ability to keep rights to the supermarket indefinitely, which pl is now not honoring. The latest draft of a new agreement allowed def to stay on through the end of 2024. Finally, def should be able to demand monitin from his replacement, just as pl expected him to pay po.

Ruling: Pl admits that there was serious talk of greatly compensating def for paying po, which had not been envisioned. However, their original agreement states that changes to the agreement must be in writing. While in practice, oral agreements were implemented, that does not invalidate the clause, and certainly not regarding such a big-ticket item as monitin. Also, pl did indeed compensate def in significant ways other than payment for monitin. Finally, def did end up signing an addendum to the agreement which again confirms the lack of right to demand monitin, and def did not reach the very high bar needed to demonstrate he signed an agreement without being aware of one of its clauses (see Shulchan Aruch, Choshen Mishpat 45:3).

We will apply an exception to the rule of following what was signed to the question of which addendum to accept. Based on the give-and-take between the sides. in addition to the statements of the sides in beit din, all indications are that def should have been sent the most updated addendum to sign. That agreement gave def a total of ten years to operate the store, as opposed to the eight years the signed version gave him. Therefore, pl’s demand of a penalty against def for not vacating the store is rejected, as def has the right to continue through Dec. 2024. If def will not vacate it then, the payment of $100 a day should be enforced because it is not overly exaggerated, and therefore it is a valid penalty clause.