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Case: The plaintiffs (=pl) rented commercial space from the defendants (=def) for their retail business for 38,000 NIS a month. The agreement obligated def to install an elevator to the store, which was critical to attract sufficient clientele. Installing the elevator was more difficult than expected, and pl did most of the work instead of def. In the interim, pl reduced, only partly by agreement, the rent they paid. After several months without progress in installing the elevator, pl declared the rental agreement void and sued for approximately 2 million NIS. This includes return of rent paid and damage to the young business’s prospects. Def responded that the elevator was delayed for several reasons: pl failed to leave security checks, pay full rent, and pay on time; there were also technical constraints beyond def’s control. Def are suing pl for incomplete rent and, if pl leaves the premises, for the cost of returning the property to its previous layout. [This time we will deal with def’s justification for not arranging the elevator.] Ruling:Technical Constraints: All agree that difficulties became known after the rental because of the makeup of the existing shaft. The contract does not put a cap on the amount that def has to pay for the elevator. However, if there were a reliable estimation that he would not have entered the agreement had he known the higher cost, this is grounds for mekach ta’ut (agreement based on incorrect information). First, the claim of oness (extenuating circumstances) does not exempt def because the problem existed before the agreement with pl (Erech Shay 312:17). Also, oness that comes upon a person from his own side, in this case, because of the difficulty with financing, is not halachic oness (see Aruch Hashulchan, Choshen Mishpat 205:12). This is in addition to the fact that the claim of oness came up inconsistently and as one of a few partially contradictory excuses, which makes it difficult to accept. Finally, it is clear from def’s statements that they realized they need to get an elevator at some point, irrespective of cost. Therefore, this excuse is rejected. Pl’s failure to give security checks: According to the contract, pl were supposed to give twelve checks for a year’s rent, as one of the contracts guarantees. They did not do so, whereas they did provide the private note of obligation of one of pl. This failure could have been the basis for a material breach of contract, which would undo the agreement. However, def admitted that they barely complained about the lack of checks, apparently accepting pl’s excuse that as a new company, they did not yet have checks. Def admit that they never threatened that they would not proceed with the elevator without the checks, and there is documentation of several promises that def will imminently sign a contract with the elevator company, without mentioning conditions. Therefore, while they did not waive the demand for the checks, they temporarily waived it as a material breach, which would have exempted them from providing the elevator (see Divrei Malkiel IV:144). Therefore, def was in material breach of the agreement due to their lack of effort to install the elevator.
P'ninat Mishpat (835)
Beit Din Eretz Hemda - Gazit
833 - A Non-Contractor in Changing Times – part II
834 - A Non-Contractor in Changing Times – part I
835 - Fallout from Failure to Install Elevator – part II
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