Exploitation as a Reason for Canceling a Contract in Israel
Can an unfair or exploitative phrasing of an agreement or specific clauses within an agreement constitute a valid reason for canceling a contract in Israel? Attorneys specializing in company law at our office deal with various cases, and we always have our client’s best interests in mind. In cases of clients wanting to cancel an agreement or purchase due to exploitation, it can be difficult to prove, but we are happy to say that we do have success in court.
What is exploitation?
Exploitation is when an individual is taken advantage of, typically financially in these cases, for the benefit of someone else. For instance, the elderly are generally an easy target for salespeople to exploit, which results in them spending large sums of money on products they do not need nor want. Unfortunately, this phenomenon has become common in Israel and lately gained more public attention.
A civil appeal (in Hebrew: “Irur Ezrachi”) in the case of an exploitative contract can rely on the precedent set by Chai Sassi v. Naaima Kikayon. In this case, a young couple convinced an elderly person who was not 100% coherent but was legally competent (capable of making decisions) to exchange apartments. The elderly victim’s apartment was naturally valued at a much higher rate than the young couple’s.
The elderly person’s family brought this case to court in an attempt to cancel the agreement, and the court ruled in favor that as the contract was based on exploitation of vulnerabilities, it should be cancelled.
Is it easy to raise a claim based on exploitation?
No. It is difficult to raise this claim because exploitation can be argued in pretty much every case. In the current market, some products are simply valued very highly, but that doesn’t necessarily mean it is legally defined as exploitation.
While it is possible to win a case due to exploitation, it is certainly not easy. Another key component of these cases is whether the person who signed the agreement actually had the legal capacity to sign an agreement of this sort. For instance, individuals with dementia, mental disorders, or who need a guardian are not in a position to sign any agreements.
It is crucial to be aware of your surroundings and to think twice before signing legally binding agreements. Although we are professionals at helping our clients get out of bad situations, it is always best if these situations are avoided in the first place. For more information on our services, you may visit our website.
If any of this is relevant to you, feel free to reach out with any inquiries or questions you may have.