1 But this is not so from a legal point of view, as the State and its authorities have an independent legal personality.

2 Cf. Peretz v. Kfar Shamaryahu (1962) 16 P.D. 2101, 2114.

3 See Kelsen, H., General Theory of Lavo and State (translated by Wedberg, A., 1949) 181.Google Scholar

4 Cf. Tedeschi, (ed.), The Law of Civil Wrongs, The General Part, (Jerusalem, 2nd ed., 1976)Google Scholar secs. 233–234, where Barak discusses the State's liability in torts.

5 See Tedeschi, G., “Some Aspects of the Concept of Contract” (1966) 1 Is.L.R. 223.Google Scholar

6 See Klinghofier, H., Administrative Law (Jerusalem, 1957, in Hebrew) 9–18.Google Scholar The author is well aware of the differences between the two definitions of administration, and prefers the organization test.

7 Compare with the situation in France, as described by Mitchell, J.D.B., The Contracts of Public Authorities (London, 1954) 180Google Scholar: institutions which are private in form though performing a service public, are included within the term “administration” in the context of administrative contracts. Several Israeli cases face the question whether private bodies performing public functions are subject to the jurisdiction of the High Court of Justice. This question was left open in Ramat Ltd. v. The Society for Reconstruction and Development of the Jewish Quarter (1971) (I) 26 P.D. 118, and in Burkan v. Minister of Finance (1978) (II) 32 P.D. 800. The private bodies, that were discussed in those cases, although performing public functions, do not perform them “by virtue of law”, as required by sec. 7 (b) (2) of the Courts Law, 1957 (11 L.S.I. 157), in order to exercise the jurisdiction of the High Court of Justice. In Sharbet Bros. Ltd. v. The Society for Elderly People (1973) (I) 27 P.D. 620, it was decided that the High Court of Justice has jurisdiction over private bodies performing public functions, according to sec. 7 (a) of the Courts Law, 1957.

8 Paless v. Ministry of Transportation (1952) 9 P.D. 436, 446; Miller v. Minister of Transportation (1960) 15 P.D. 1989, 2001.

9 Rederiaktiebolaget Amphitrite v. The King [1921] 3 K.B. 500, 503.

10 Langrod, G., “Administrative Contracts: A Comparative Study” (1955) 4 Am. J. Comp. L. 325, 328.CrossRefGoogle Scholar And see in general, Turpin, C., Government Contracts (Penguin Books, 1972).Google Scholar

11 Balaban v. The Municipality of Tel Aviv (1951) 6 P.D. 257, and Feinberg v. Local Council of Givatayim (1956) 11 P.D. 209.

12 Balaban, op. cit.

13 Feinberg, op. cit.

14 Although in the first case the municipality's obligation was for an unlimited duration and in the second the franchise was given for 15 years, it is hard to accept the time-factor as a distinguishing factor.

15 Meichal Umassah Shipping Co. Ltd. v. Minister of Finance (1957) 11 P.D. 1490, and Rehovot Packing House v. Minister of Agriculture (1961) 16 P.D. 20.

16 Meichal Umassah, op. cit.

17 Ibid., at 1511. Landau J. was in the minority. The majority judges in that case saw the contract as creating an illegal monopoly, and therefore did not refer to the distinction between governmental and commercial contracts.

18 Rehovot Packing House, op. cit.

19 Ibid., at 29.

20 Irgun Hamishtaknim v. Minister of Labour (1953) 7 P.D. 922.

21 Van Mirop v. Director of Housing Department (1956) 11 P.D. 659.

22 Schneider v. Development Authority (1958) 13 P.D. 891, 893; Feinberg v. Local Council of Givatayim (1956) 11 P.D. 209.

23 Schneider v. Development Authority, op. cit.; Miller v. Minister of Transportation (1960) 15 P.D. 1989.

24 Supra n. 9.

25 Street, H., Government Liability (Cambridge, 1953) 98–99Google Scholar; Mitchell, op. cit. supra n. 7, at 29, 53–66; Garner, F., Administrative Law (London, 4th ed., 1974) 278.Google Scholar

26 Meichal Umassah, op. cit. supra n. 15, at 1511–1512; Miller, op. cit. supra n. 8 at 2001.

27 (1952) 9 P.D. 436.

28 Ibid., at 446.

29 Cf. Adato v. Amidar (1964) (III) 18 P.D. 51, 57, where Landau J. describes both sides of the Israel Lands Authority's activities, concerning sale of property: “… On the one hand (these actions) have a prominent commercial aspect, and in this sense the Israel Lands Authority is no different from any seller who offers his assets on the market and tries to get the best price in exchange for them. But there is one important difference, lying in the nature of the Authority as a public body: it must not discriminate between citizens on immaterial grounds. The second aspect of the action of sale refers to the public aspect of the Authority's actions—the Authority must bear in mind general public objectives, such as the development and planning of the assets sold by it, the prevention of profiteering as to its assets, etc.”

30 Cf. Miller, op. cit., supra n. 8, at 2001, where Sussmann J. says: “In civil matters the State is granted the capacity to undertake obligations under contract, according to private law, and after entering such contract, the contract has the same status as any other contract entered by an individual. … However, this contract… is not a ‘commercial’ (civil) contract. The State has undertaken obligations… in a matter in which it is acting as such, as the government. The subject of its undertaking is a governmental act, and its effect will be determined according to public law.”

31 See State of Israel v. Maoz (1975) (III) 30 P.D. 748 and Maoz v. State of Israel (1976) (II) 31 P.D. B21, where the Supreme Court reconfirmed this basic rule.

32 Initially the rule was laid down in Rehovot Packing House, supra n. 15, at 30 and reconfirmed in Negev Building and Development Ltd. v. Minister of Defence (1974) (II) 28 P.D. 449. For a list of cases citing this rule see Friedmann, D., “Application of the Public Law Duties on Public Bodies Acting in the Private Sphere” (1974) 5 Mishpatim 598, 605, n. 23.Google Scholar

33 In a new decision, Mahmud v. Minister of Education (1979) (I) 33 P.D. 767, the Supreme Court hinted at the same direction. Barak J. said at 770–771: “… [a committee which acts as a tender committee] … is subject to the rules of public tenders developed by this Court on the one hand, and to the provision of sec. 12 of the Contracts (General Part) Law, 1973, which determines the duty to act in customary manner and in good faith in negotiating a contract, on the other hand”. While Bechor J. said at 784: “If the public authority does not act reasonably and fairly according to the rules of public tenders, it could thus give the injured party a cause of action according to the Contracts (General Part) Law, 1973, on the grounds of carrying out negotiations without good faith…”.

34 This requirement was discussed and applied in many decisions. To cite only a few: Ben Haim v. Israel Lands Authority (1975) (I) 30 P.D. 412; Sci-Tex Corporation Ltd. v. Minister of Industry (1975) (I) 30 P.D. 673; Magen v. Minister of Agriculture (1976) (I) 31 P.D. 634; Sci-Tex Corporation v. Minister of Finance (1979) (II) 33 P.D. 593.

35 Sci-Tex Corporation v. Minister of Industry (1975) (I) 30 P.D. 673, 676; Ben-Haim, supra n. 34, at 415.

36 Mahmud v. Minister of Education, op. cit., and Reiss v. Israel Lands Authority (1978) (II) 32 P.D. 617, 620, where Bechor J. assumes that sec. 12 of the Contracts (General Part) Law, 1973, applies directly to the State.

37 Cf. Langrod, supra n. 10, at 327.

38 Therefore it seems that Barak J.'s statement in Mahmud, supra n. 33 at 771, that sec. 12 invalidates a recommendation that is given with bias, is incorrect. Such recommendation will be invalidated by applying the normal rules of public law while sec. 12 affords only damages.

39 By this direct application we here avoid controversy as to whether sec. 61(b) is a proper instrument for extending the application of the bona fide provisions to other legal acts and non-contractual obligations of the public administration. As to this question, see Azarnikov v. State of Israel (1976) (I) 31 P.D. 270; Bronovsky v. Director of Customs (1977) (II) 32 P.D. 75; Sussmann, , “A Forecast of Problems in the Law of Contracts” (1976) 2 Tel Aviv University Studies in Law 17, 31.Google Scholar

40 Cf. e.g., Miller, the paragraph cited at supra n. 30.

41 Supra n. 9.

42 Cf. Wade, , Administrative Law (Oxford, 3rd ed., 1971) 296Google Scholar; per Denning, J. in Robertson v. Minister of Pensions [1948] 2 All E.R. 767, 770).Google Scholar But see Mitchell, J.D.B., The Contracts of Public Authorities (London, 1954) 30–31.Google Scholar

43 Street, H., Governmental Liability (1953) 98–99.Google Scholar

44 Cf. Smith, De, Judicial Review of Administrative Action (London, 3rd ed., 1973) 279.Google Scholar

45 For a general discussion of absorption of English law by means of Art. 46, and its influence on the law of contract and on administrative law, see Friedmann, D., “Infusion of the Common Law into the Legal System of Israel” (1975) 10 Is.L.R. 324, 369, 377.Google Scholar

46 Tedeschi, G., “The Problem of Lacunae in the Law and Art. 46 of Palestine Order-in-Council, 1922” in Studies in Israel Laiv (Jerusalem, 1960) 166.Google Scholar

47 Sec. 63 of this law states explicitly “Art. 46 of the Palestine Order-in-Council, 1922–1947, shall not apply to matters dealt with by this Law”.

48 Cf. Sussmann J. in Miller, supra n. 8 at 2001: “If, for example, the State undertakes to pardon a criminal in exchange for foreign currency, or if it undertakes by contract with a private individual to declare or refrain from declaring war on another State, no one can deceive himself as to the effect of such undertaking.”

49 (1951) 6 P.D. 257.

50 (1956) 11 P.D. 209.

51 Whose source, at that time, was sec. 64 of the Ottoman Code of Civil Procedure, now replaced by sec. 30 of the Contracts (General Part) Law, 1973

52 Therefore, the presumption laid down by Kahan J. in the new decision Uman v. Minister of Commerce and Industry (not yet published) is exposed to criticism. According to this presumption the administration can never intend to enter into legal relations in a governmental matter. See n. 59 infra.

53 Note that the technique of implying terms is no longer available to the Israeli lawyer. Implied terms are now replaced by the doctrines of interpretation and supplementing the contract. See Contracts (General Part) Law, 1973, secs. 25 and 26.

54 Cf. Tedeschi, , “Some Aspects of Contract” (1966) 1 Is.L.R. 223, 223–224.Google Scholar

55 As offer and acceptance are the constituents of an agreement, it can be said that by ruling that a contract is made “by way of offer and acceptance” (sec. 1 of the Contracts (General Part) Law, 1973), the Israeli legislator has impliedly expressed the attitude than an Israeli contract is a product of the parties’ consent and not a promise of one party, relied upon by the other.

56 The attempt to see sec. 64 (b) of the Contracts (General Part) Law, 1973, as introducing a unilateral promise into the Israeli legal system, cannot be successful. This section states: “The provisions of this Law shall, as far as appropriate and mutatis mutandis, apply also to legal acts other than contracts and to obligations not arising from a contract”. Obviously, this section refers only to existing legal acts. Cf. Tedeschi, , “Contract (General Part) Bill, 1970” (1971) 3 Mishpatim 105, 109.Google Scholar

57 A promise “as such” to be distinguished from a promise embodied in a contract, from a promise made during the pre-contractual negotiation, and also from a promise which creates the grounds for a plea of estoppel. All these promises will be dealt with in the following pages.

58 Sci-Tex Corporation v. Minister of Industry (1975) (I) 30 P.D. 673.

59 Supra n. 52. In this matter, an administrative promise was given in 1976 that certain governmental funds would continue to exist until 1983. Kahan J. expresses his opinion as to administrative promises in the following words: “When a commercial body negotiates with a government ministry and an agreement is reached, the future existence of which is dependent on the continuance of the economic policy that existed at the time when the agreement was reached, it should be clear to all concerned that the agreement was made without any intent to create a legal undertaking.” It would clearly be wrong to deduce from the above that an administrative authority can never form the intent which is a prior condition to a contractual bond, since Kahan J. relates only to an undertaking in respect of the continuing existence of a certain economic policy. However, even within the narrow boundaries of this issue, it appears that the authority can make a serious and sincere undertaking, even if its effect is dependent on certain conditions, and especially in the absence of future conflict between the undertaking and the public welfare. An a priori denial of the effect of every undertaking concerning executive actions is unjust from the point of view of the citizen, is inefficient from the point of view of the authority, and is in conflict with the principles of the law.

60 But see, even before Sci-Tex, the majority judgment in Polak v. Minister of Industry (1970) (II) 25 P.D. 3, where Witkon J. expresses his view (at p. 8) that promises made by the administration ought to be kept.

61 Ibid., at 676: “If a promise is given by an official within his statutory authority, intending it to have legal effect, and the other party accepts it in that manner, public decency demands that the promise in fact be kept when it is in the power of the promisor to do so, even if the citizen has not changed his position for the worse, consequent to the promise.” And, further stated: “When a legal promise is given by the person authorized to give it and capable of keeping it, the promise is binding, and if there is no legal justification to change or cancel it—it is to be honoured and this Court will order its fulfilment.”

62 Negbi, , “The State's Duty to Fulfil its Promises” (1978) 31 HaPraklit 376.Google Scholar

63 Hotels Organization in Israel v. Minister of Tourism (1975) (I) 30 P.D. 837; Osem Export v. Minister of Finance (1976) (III) 30 P.D. 636. The distinguishing factor was the explicitness and definitiveness of the administration's promise.

64 Unum, op. cit. Some reservation can also be found in Osem, op. cit., at 642, where Witkon J. while discussing the decision in Sci-Tex says that this decision was reached “rightly or wrongly”.

65 “Section 6 (a) Acceptance may be by an act in implementation of the contract or by some other conduct if these modes of acceptance are implied in the offer…”.

66 Jorden v. Money (1854) 5 H.L. Cas. 185.

67 This was a development which took place within the doctrines of equity. Since Hughes v. Metropolitan Railway (1877) 2 App. Cas. 439 equity recognized the power of a promise of future conduct to establish estoppel, or rather “equitable estoppel”, sometimes named “quasi estoppel” or “promissory estoppel”. Cheshire, & Fifoot, , The Law of Contract (9th ed., 1976) 90.Google Scholar

68 See sec. 90 of the Restatement—Contracts 2d.

69 Garner, , Administrative Law, 138.Google Scholar

70 Kahan, J. in Levy v. Assessment Officer (1978) (I) 32 P.D. 421, 436.Google Scholar In that case five judges of the Supreme Court discuss the effect of estoppel in relation to extra-legal concessions. Witkon J. (at 432) uses the distinction—criticized above—between governmental acts and commercial contracts in order to reach the conclusion that estoppel is an unavailable claim in the area of extra legal concession regarding taxes. Asher J. also expresses the view that promissory estoppel is unavailable if raised to legalize a void administrative act. Kahan J., in the minority, recommends the adoption of the modern American attitude, to wit: accepting estoppel when raised in relation to extra-legal concessions.

71 Although somewhat alike in nature and consequences, promise and estoppel ought to be kept distinctive. But see Magen v. Minister of Agriculture (1976) (I) 31 P.D. 634, where promise and estoppel are confused.

72 (1976) (II) 32 P.D. 337.

73 The source of this ruling is to be found in Weinstein v. Kadima (1954) 8 P.D. 1317, and it was repeated and confirmed in Kornfeld v. Shmuelov (1966) (I) 21 P.D. 310.

74 Sec. 7(a) of the Civil Wrongs Ordinance (2 L.S.I. (N.V.) 5) and see in general Rubinstein and Friedmann, , “Tortious Liability of Public Officers” (1965) 21 HaPraklit 61.Google Scholar

75 (1974) (II) 28 P.D. 449.

76 Witkon, J., in I.S.I. v. Municipality of Jerusalem (1978) (II) 32 P.D. 581, 585–6.Google Scholar

77 Klein, , “New Remedies in the High Court of Justice” (1975) 10 Is.L.R. 582Google Scholar, but see Zamir, , Adjudication in Administration Cases (Jerusalem, 1975, in Hebrew) 109–112Google Scholar, recommending award of damages by the High Court of Justice.

78 Dadon v. Municipality of Jerusalem (1978) (II) 32 P.D. 729.

79 Spolinski v. Minister of Finance (1974) (I) 29 P.D. 421.

80 Cf. Van Mirop v. Director of Housing Department (1956) 11 P.D. 659; Schneider v. Development Authority (1958) 13 P.D. 891; Rehovot Packing House v. Minister of Agriculture (1961) 16 P.D. 20; Peretz v. Kfar Shmaryahu (1962) 16 P.D. 2101; Negev Building and Development Ltd. v. Minister of Defence (1974) (II) 28 P.D. 449.

81 Cf. Kassem v. Municipality of Nazareth (1951) 5 P.D. 775; Irgun Hamish-taknim v. Minister of Labour (1953) 7 P.D. 922; Samuel v. Minister of Defence (1955) 9 P.D. 1936; Feinberg v. Local Council Givatayim (1956) 11 P.D. 209; Elyadin v. State of Isreal (1959) (II) 13 P.D. 1165; Shaltiel v. Minister of Labour (1959) 14 P.D. 29; Zabi’ v. Minister of Housing (1970) (II) 24 P.D. 35; Ilu v. Minister of Housing (1974) (II) 28 P.D. 495; Simer v. Minister of Industry (1974) (III) 29 P.D. 233; Yanay v. Municipality of Haifa (1978) (I) 32 P.D. 47.

82 Lease in Elyadin, supra n. 81.

83 Nuisance, in Friedman v. Municipality of Haifa (1970) (II) 24 P.D. 577.Google Scholar

84 Contract with the Electricity Company in Simer, supra n. 81.

85 Hire in Peretz, supra n. 80; Contract for transport of woods, in Meichal Umassah Shipping Co. v. Minister of Finance (1957) 11 P.D. 1490.Google Scholar

86 Friedmann, D., “Application of the Public Law Duties on Public Bodies Acting in the Private Sphere” (1974) 5 Mishpatim 598.Google Scholar

87 Zamir, supra n. 77.

88 Miller v. Minister of Transportation (1960) 15 P.D. 1989; Meichal Umassah Shipping, supra n. 85.

89 Balaban v. Municipality of Tel Aviv (1951) 6 P.D. 257.

90 Rehovot Packing House, supra n. 15.

91 Negev Building and Development Ltd., supra n. 80.

92 See Friedmann, supra n. 86 at 601.

93 According to the criteria laid down in the Courts Law, 1957.

94 Zamir, supra n. 77, at 68.

95 In a new decision, Burkhan v. Minister of Finance (1978) (II) 32 P.D. 800, Cohn J. expressed his view that the High Court of Justice has no jurisdiction in the matter under discussion, as the petitioner has an alternative remedy. As Cohn J. viewed the tender of apartments to the public by the Society for Reconstruction and Development of the Jewish Quarter in the Old City of Jerusalem, as an invitation to deal, and therefore as being governed by sec. 12 of the Contracts (General Part) Law, 1973, he was ready to send the petitioner to a civil court, where he could ask for a declaratory judgment. Bechor J. dissented: As the party in breach of the duty to act in customary manner and in good faith in the pre-contractual negotiations, is liable only to an action for damages, there was in his view—no real alternative remedy in that case. Bechor J.'s view is typical of the attitude that determines the jurisdiction in accordance with the desired remedy.

96 Sec. 7(a) of the Courts Law, 1957.

97 Cf. Witkon J.'s opinion in I.S.I, v. Municipality of Jerusalem, supra n. 76.

98 For a general discussion of that section see: Galin, Y., “Section 5 to the Civil Procedure (the State as Litigant) Act, 1958 and the Rule of Law” (1979) 32 HaPraklit 399.Google Scholar For the criticism and a call for the repeal of that section, see Zamir, supra n. 77, at 141.

99 Klinghoffer, , Administrative Law, 126, n. 9.Google Scholar

100 Zamir, supra n. 77, at 33.

101 Cf. Zamir, op. cit., at 98 et seq.

102 But not with a municipality or local council. Cf. Feinberg v. Local Council of Givatayim (1956) 11 P.D. 209.

103 This is obviously a procedural—and not a substantive—barrier. Cf. Muzarei Asphalt v. State of Israel (1979) (I) 33 P.D. 641, 643, where the attorney for the State asked the court not to enforce a contractual term because such enforcement would not be just in the circumstances of the case, as sec. 3(a) of the Contracts (Remedies for Breach of Contracts) Law, 1970, provides. It is interesting to note that sec. 5 of the Civil Procedure Amendment (the State as a Party) Law, 1958, was not referred to. This is possibly the practice of the State in commercial transactions. It can be said that by entering such a transaction the State impliedly waives its immunities. Another possibility is that a judgment for payment is not considered to be within sec. 5 as paying money is not “specific performance”.

104 Bat Galim v. Mifalei Bat Galim (1952) 9 P.D. 775, 777.

105 Goldenberg, A., “The Lawyer and the Rule of Law” in (1979) Orech-Hadin (Gazette of the Israeli Bar Association) Issue No. 8.Google Scholar

106 Cf. sec. 18 of the Tenant's Protection Law (Consolidation Version) 1972, which provides that “for the purposes of this Law, the State shall be treated like any other person”, and sec. 18 of Standard Contracts Law, 1964, which says that “for the purposes of this Law, the State as a supplier shall have the same status as any other supplier”.

107 I have intentionally dealt here with only one alternative provided by sec. 42. Obviously, the State has no vested “right”, which can be affected by enactments, to disregard its contracts.

108 Cf. Mizrachi, , “Sec. 42 of the Interpretation Ordinance: State Privilege” (1973) 5 Mishpatim 131, 147.Google Scholar

109 Van Mirop v. Director of Housing Department (1956) 11 P.D. 659.

110 In the Van Mirop case, at 666, Landau J. recommends reversing the presumption of sec. 42, so that every law will apply to the state, unless otherwise provided.

111 Cf. Shalev, G., Exemption Clauses (Jerusalem, 1974, in Hebrew) 45.Google Scholar

112 Supra n. 15, at 30.

113 Thus in Negev Building and Development Ltd. v. Minister of Defence, supra n. 80, the assumption on which the Court proceeded was that the parties were still in the pre-contractual stage. This assumption was needed in order to employ the jurisdiction of the High Court of Justice, but it was not justified under the circumstances of the case.

114 Especially from sec. 2 which states as follows: “A person's proposal to another person constitutes an offer if it attests to the offeror's resolve to enter into a contract with the offeree and is sufficiently definite to enable the contract to be concluded by acceptance of the offer. A proposal may be to the public”.

115 Cf. Burkhan v. Minister of Finance (1978) (II) 32 P.D. 800, where Cohn J. looked upon a tender of an apartment to the public (which was in fact, a tender) as an invitation to the public to provide the respondent with offers (p. 802), and applied to both the invitation to deal and the offer (sec. 12 of the Contracts (General Part) Law, 1973). But see, the decision in Negev Building, supra n. 80, and the wrong assumption (no contract) on which it is based.

116 Negev Building, supra n. 80, and Dadon v. Municipality of Jerusalem, supra n. 78.

117 In fact, a contract was made there when the authorized body informed the contractors that they had won the tender.

118 Cf. Witkon, , “The Law in Theory and Practice” (1979) 9 Mishpatim 355Google Scholar, 358 where Witkon J. describes tender issues as mere civil conflicts among contractors.