Shabbat Parashat Vayeishev 5786

P'ninat Mishpat: Multiple Agreements and Parties – part I

Case: The plaintiff (=pl) worked on a “Tama 38” building project (refurbishing and expanding a building in return for rights to the new apartments) on behalf of def1, who had rights over the project. Later, def1 formed a partnership (=def) with her lawyer (=def2) and def3, and pl helped them get the homeowners and municipality to accept the building plan. The building has not been done yet. Pl was involved in four agreements – sales agreements to buy a new apartment at a subsidy and fee agreements, each initially with def1 and later ostensibly with def. Pl demands his fee. Def has various claims against the agreements – lack of necessary signatures, pl’s breach of agreement. [There were various rulings of beit din and an appeal process, which we will deal with in installments.]

Ruling: First contract with def1: The contract, signed by pl and def1 allows pl to buy an apartment for 800,000 NIS. Def’s claim that the profit pl would receive per the agreement is much higher than reasonable for pl’s limited contribution to the project. Decision: The general rule is that one cannot nullify a work agreement due to mispricing, whose laws apply mainly to sales of objects (Shulchan Aruch, Choshen Mishpat 227:33). The matter is clearer regarding contributions to a big building project, where the profits can be very high.

Second contract (apparently with def1): This contract, titled an addendum to the first, gives more details about subsidized buying options and a 4% fee for pl for apartments sold to others. It is undated, signed only by def2 in def1’s name, and it has a clause that requires the agreement’s confidentiality. Def claims that it was written after def received rights to the project, and therefore def2’s signature was insufficient, as def’s charter requires def3 to sign as well. Def also argue that such unreasonable benefits could only have been extracted from def2 with trickery and pressure, which explains the confidentiality clause. Decision: As mentioned, a fee for such work is rarely invalid due to overpricing. Also, the fact that pl did not sign is not a problem, as he could have added his signature to his copy at any time. Thus, the contract is valid at least as an option for pl. Since pl has already kept his part of the deal (successful work in organizing the project), def1 did not lose anything by pl not signing. Therefore, the second agreement is also valid. Since def, as a partnership, received rights to the project and thereby accepted def1’s responsibilities, the agreement obligates def as well.

Sales contract with def: This contract, giving terms for pl to receive an apartment, can only apply to def and not one or some partners, because at that time (2017), def as an entity owned the rights to the project. Yet, only def2 signed it, even though def3 is the authorized signatory. Nevertheless, beit din accepts the part of the Law of Contracts that allows an insufficiently authorized contract to be accepted after-the-fact by the powers of the company. While there was no formal process of post-facto authorization, there is strong proof that def3 was involved in implementing and strengthening the agreement, which is equivalent to post-facto authorization.

Therefore, beit din validated the first three contracts. We will see more next time.

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