Contracts (General Part) Law, 5733-1973

In the performance of an obligation arising from a contract, one must act in the customary manner and in good faith; and the same applies to the exercise of a right arising from a contract.

An obligation may be performed by a person other than the debtor, unless by reason of the nature of the obligation, or by reason of the agreement between the parties, the debtor must perform it personally.

An obligation in respect of which no time for its performance has been agreed upon shall be performed within a reasonable time after the formation of the contract, at the time notified by the creditor to the debtor a reasonable time in advance.

An obligation may be performed before its due time, provided that the debtor has notified the creditor thereof a reasonable time in advance and that the matter will not prejudice the creditor.

An obligation to deliver an asset or provide a service, in respect of which the kind or quality thereof has not been agreed upon, shall be performed by the delivery or provision of an asset or service of medium kind and quality.

An obligation to pay for an asset or service in respect of which the rate thereof has not been agreed upon shall be performed by payment of a sum that would have been appropriate to be paid under the circumstances at the time of formation of the contract.

An obligation to pay in Israel in foreign currency, the payment of which in that currency is prohibited by law, shall be performed by payment in Israeli currency, at the official rate of exchange on the day of payment.

Where, for the performance of an obligation, the debtor has undertaken another obligation towards the creditor, or has transferred to him for that purpose a right against a third party, there is a presumption that the parties did not intend to extinguish the obligation unless the other obligation or the right has been performed.

A sum given in discharge of a single obligation shall be appropriated first to the account of the expenses incurred by the debtor in respect of that obligation, thereafter to the account of interest, and finally to the account of the obligation itself.

Where a sum is given to a creditor at a time when several obligations are owed to him by the debtor, the debtor may, at the time of payment, designate the obligation to whose account the sum is to be appropriated; if he has not done so, the creditor may do so.

Where performance of an obligation has become impossible and, as a result, the debtor has a right to compensation or indemnification against a third party, the debtor shall transfer to the creditor the right, or what he has received thereunder, up to the value of the obligation.

Where two persons owe a single obligation, there is a presumption that they are jointly and severally liable.

A debtor who has performed an obligation beyond his share is not entitled to recover from another debtor to the extent that the other debtor would have been capable of being released as against the creditor by virtue of a plea that was known to him and which he did not raise in his defence.

The following are repealed —

In matters dealt with by this Law, Section 46 of the Palestine Order in Council, 1922–1947, shall not apply.

This Law shall commence on the 1st of Elul 5733 (29 August 1973); the prior law shall continue to apply to contracts concluded before the commencement of this Law.