1 In Israeli law the substantive requirement of writing is found in sec. 8 of the Land Law, 1969, (23 L.S.I. 283) sec. 5 (a) of the Gift Law, 1968 (22 L.S.I. 113) and various other statutes. For additional legislative sources of this substantive requirement of writing see Shalev, G., Contract Law (Jerusalem, 1990, in Hebrew) 290.Google Scholar

2 This is true in Common Law legal systems. For a general discussion of this requirement see Farnsworth, E. A., Contracts (Boston and Toronto, 1982) 41Google Scholaret seq; Cheshire, Fifoot & Furmston's, , Law of Contract (London, 11th ed., 1986) 67Google Scholaret seq.

3 The terms “entering and exiting” contract law are used by G. Gilmore, The Death of Contract (Ohio State University Press, 1974) 47–48. I have used the term “escape” rather than the term “exit” since my use is slightly different from Gilmore's. Gilmore demonstrates in his book how contract law theory in the 19th century was characterized by strict laws governing entrance into obligation (an uncompromising demand for consideration), and strict laws governing exit from obligation (narrow doctrines of impossibility of performance and mistake); and how the concept of strict liability (laws burdening exit from liability) corresponded with limited damages. Gilmore points out that this theory collapsed in the 20th century. He shows how laws relaxing entrance into obligation (reliance and enrichment) replaced the concept of consideration; how at the same time laws relaxing exit from obligation resulted from a liberalisation of the laws governing impossibility of performance and mistake; and finally, how the movement away from strict liability was consistent with an increase in both damages and the importance of specific performance. Gilmore's position is that doctrines such as impossibility of performance, or mistake (or other doctrines with regard to vitiating factors) determine the difficulty of exiting obligation (the nature of responsibility involved), whereas the law of remedies upon breach defines the scope of responsibility. Since, according to Gilmore's hypothesis, doctrines like impossibility of performance and mistake remove the parties from the realm of contractual responsibility (these doctrines preclude the protection of the expectancy interest), the measure of consistency between rules governing exit from liability and those which govern entrance into liability, as a result of formation of a contract, must be checked. This apparently is also Nili Cohen's position as demonstrated in her article “Status, Contract and Interference with Contractual Relations” (1990) 39 HaPraklit 304, at 307–308. In contrast, the rules governing exit from obligation that I am discussing refer to the scope of contractual obligation and not to rules which allow exit from the realm of contractual obligation, thus making the question of consistency I am discussing a different one from that of Gilmore's.

4 See Cohen, N., “Contract Rules and Good Faith in Bargaining: Formalism v. Principles of Justice” (1986) 37 HaPraklit 13.Google Scholar

5 See Cohen, N., “Requirement of Form in Contracts” (1989) 38 HaPraklit 383.Google Scholar The origin of this development was already discussed in 1980 by Professor Daniel Friedman in his commentary on court decisions: “Section 8 of the Land Law: The Need for a Change” (1980–81) 33 HaPraklit 4. See also Deutsch, M., “Supplementation of Terms in Land Contracts” (1979–1980) 7 Iyunei Mishpat 248Google Scholar; Cohen, Y., “Section 8 of the Land Law, 1969 — The Essence of a Written Agreement and the Status of Verbal Agreements” (1981) 11 Mishpatim 311.Google Scholar

6 On the good faith principle in negotiation see Even, D., “Culpa in Contrahendo” (1971) 1 Iyunei Mishpat 328Google Scholar; Hofar, D., “The Doctrines of Good Faith and Culpa in Contrahendo in the Law of Contract” (1975) 6 Mishpatim 397Google Scholar; Sussman, Y., “The Concept of Good Faith in the Law of Contracts in Israel — The Role of German Law” (1979) 6 Iyunei Mishpat 485Google Scholar; Pilpel, D., “Good Faith in Negotiations toward the Formation of a Contract” (1977) 5 Iyunei Mishpat 608Google Scholar; Rabello, A., “Section 12 of the Contracts (General Part) Law: Culpa in Contrahendo” in Collection of Lectures Delivered at the Seminar for Judges (1975) 57Google Scholar; Shalev, G., “Section 12 of the Contracts (General Part) Law — Good Faith in Negotiations” (1976) 7 Mishpatim 118Google Scholar; Shalev, G., “Promise, Estoppel and Good Faith” (1987) 16 Mishpatim 295Google Scholar; Shalev, G., “The Negotiation Stage of Contracts” (1989) 14 Iyunei Mishpat 293.Google Scholar

7 See Rabello, A., The Law of Obligations — Selected Topics: From Roman Law to the New Law of Contracts (The Harry Sacher Institute for Legislative Research and Comparative Law, The Hebrew University of Jerusalem, 1977, in Hebrew) 1982Google Scholar; A. Rabello, “Section 12 of the Contracts (General Part) Law, 1973: Culpa in Contrahendo”, supra n. 6, at 62.

8 See Mautner, M., “Risk Creators and Those Exposed to Risks: The Defence Based on Another's Appearance in the New Civil Legislation” (1986) 16 Mishpatim 92Google Scholar, at 100.

9 See G. Shalev, “Section 12 of the Contracts (General Part) Law — Good Faith”, supra n. 6, at 325.

10 See Kot v. Organization of Tenants, Commercial Centre, Ramat Yosef (1977) 31 (iii) P.D. 813; Pnidar v. Castro (1981) 35 (ii) P.D. 717, at 723; Raviv Moshe and Co. v. Beth Yules (1983) 37 (i) P.D. 533, at 552.

11 On reliance damages see Fuller, L.L. & Perdue, W. R., “The Reliance Interest in Contract Damages” (1936–1937) 46 Yale L. J. 52Google Scholar (Part 1) 373 (Part 2).

12 Such are the rules of restitution as they appear in the Contracts (General Part) Law, 1973 (27 L.S.I. 117) and Contracts (Remedies for Breach of Contract) Law, 1970 (25 L.S.I. 11). See also Friedman, D., “Principles of the Laws of Unjust Enrichment in Light of New Israeli Legislation” (1981–1982) 8 Iyunei Mishpat 22, at 50–51Google Scholar; see also Deutsch, S., “Rescission and its Effect on Restitution” (1984) 19 Is. L.R. 388Google Scholar, at 403, in which the author differentiates between restitution, resulting from breach of contract, which he sees as a contractual principle, and restitution as the result of the presence of a vitiating element in a contract which he sees as an extra-contractual principle.

13 See Shikun Ovdim v. Zafnik (1983) 37 (i) P.D. 579.

14 Ibid., at 583. For a discussion of this decision see Deutsch, S., “Section 12 of the Contracts Law: A Panacea for all Ills?” (1986) 4 Mehkarei Mishpat 39Google Scholar; N. Cohen, “Contract Rules and Good Faith in Bargaining: Formalism v. Principles of Justice”, supra n. 4, at 34 et seq; Pilpel, D., “Absence of Good Faith in Negotiation: Remedies” (following the Shikun Ovdim v. Zafnik decision) (1986) 11 Iyunei Mishpat 307.Google Scholar

15 See State of Israel v. The Eilat Shipping Services Company (1986) 40 (ii) P.D. 785, at 795.

16 Ownership of the land that was supposed to be transferred to the respondents in 1981 as a result of a “contract” whose existence was claimed by the respondent, did not in fact pass. The court ruled in favor of the respondents and awarded them damages in the equivalent of the potential profit denied to them as a result of the events described above; see ibid., at 796. The court diminished the measure of damages awarded in the lower court, but the reason for this was that the respondents had not proved to the court's satisfaction all of the potential profits they wished to claim. From reading this decision it might appear that the court was not fully aware of the significance of damages. The court awarded them while refusing to order specific performance because it did not recognize the existence of a contract. Nonetheless, they awarded damages after rejecting the plaintiffs argument that the amount of damages awarded by the District Court exceeded the boundaries of the “closed list” in section 12(b) of the Contracts (General Part) Law. It is thus possible that the court was aware of the implications of its decision.

17 On expectancy damages see Fuller & Perdue, supra n. 11.

18 Sonnenstein v. Gabasso (1988) 42 (ii) P.D. 278. For a discussion of this decision see Shalev, G., “Preliminary Negotiations and Good Faith” (1990) 19 Mishpatim 457.Google Scholar

19 Ibid., at 287–288.

20 Ibid., at 296–297.

21 Grossman and K.B.K. v. The Estate of Biderman (1972) 26 (ii) P.D. 781.

22 Kapulsky v. Golan Gardens (1974) 28 (ii) P.D. 291.

23 Ibid., at 296. For a discussion of this decision see Mei-Tal, A., “Prerequisites Required for Land Deals in Section 8 of the Land Law, 1969” (1975–1976) 4 Iyunei Mishpat 475Google Scholar; Gross, Y., “‘The Writing Requirement’ as it Appears in Section 8 of the Land Law, 1969” (1974–1975) 29 HaPraklit 347.Google Scholar

24 For a comprehensive description of this easing trend as reflected in issues discussed below as well as others, see N. Cohen, “Requirement of Form in Contracts”, supra n. 5, at 406 et seq.

25 Kadari v. The Order of the Sisters of St. Charles (1976) 30 (i) P.D. 800.

26 See Ovadiah v. Adarbi (1976) 30 (iii) P.D. 533; Beit Halakah 731 v. Mikasvilli (1978) 32 (ii) P.D. 57; Ravinai v. The Man Shaked Company (1979) 33 (ii) P.D. 281 (“the Ravinai decision”); Jadir v. Jabar (1987) 41 (ii) P.D. 533; Botkovski v. Gat (1990) 44 (i) P.D. 57. For a discussion of the parallel existence of a stricter trend see N. Cohen, “Requirement of Form in Contracts”, supra n. 5, at 416 et seq. There is no doubt that even if there are court decisions that support a strict approach to the supplementation of terms, these decisions are in the minority and do not reflect the dominant position adopted by the courts.

27 See supra n. 21, at 786.

28 See the Ravinai decision, supra n. 26, at 786. See also Rubinstein and Co., Construction v. Louis (1980) 34 (iii) P.D. 591, at 595. Even though this issue was left open in the Rubinstein decision too, due to the special circumstances of the case (the document was written by the seller on the back of a form ordinarily used by the seller), the court recognized the existence of writing even though the seller did not sign the document.

29 Maxim Apartments v. Garbi (1983) 37 (i) P.D. 589, at 597 et seq.

30 See Botkovski v. Gat, supra n. 26, at 66; Neve Am in Ramat Gan v. Elazari (1989) 43 (iv) P.D. 312, at 319.

31 See the Ravinai decision, supra n. 26, at 287; Weinstein v. Gorin (1989) 43 (ii) P.D. 837, at 841; Ellision v. The Ya'akov Yahlomi Company (1987) 41 (iv) P.D. 160, at 163; Sherbet v. Schwarzbord (1982) 36 (iv) P.D. 197, at 211; Goyta v. Weiss (1977) 31 (ii) P.D. 187, at 189; Ovadiah v. Adarbi, supra n. 26, at 536; Pasternak v. Leui (1974) 28 (i) P.D. 658, at 661.

32 Concerning the definiteness requirement see Shalev, G., Contract Law, supra n. 1, at 93Google Scholaret seq.

33 See, for example, sections 9(a), 10(a), 20 and 21 of the Sale Law, 1968 (22 L.S.I. 107); sections 5(b), 13(b) and 14 of the Hire and Loan Law, 1971 (25 L.S.I. 152); sections 41, 44 and 45 of the Contracts (General Part) Law, 1973. Additional rules appear mainly in tax legislation which is relevant to the transactions.

34 See Zandbek v. Danziger (1976) 30(ii) P.D. 260, at 271; Kadari v. The Order of the Sisters of St. Charles, supra n. 25 at 803; Dovshani v. Hamami (1985) 41(ii) P.D. 244, at 249.1 do not refer to section 64(3) of the Ottoman Rules of Civil Procedure which permitted supplementation only of incidental term; see Megiddo v. Dior Chen (1970) 24 (ii) P.D. 6, at 8; Griedl v. Horowitz (1957) 11 (i) P.D. 57, at 59. In contrast to this section most of the rules pertaining to supplementation deal with terms essential to the formation of a contract. As stated, perhaps some of these terms could have been supplemented by referring to the custom of the parties or to general custom. See Avrahm v. Chevza (1975) 29 (i) P.D. 737, at 742. On the position that supplementation derived from the conduct of the parties (sec. 26 of Contracts (General Part) Law) can apply only to incidental terms; see G. Shalev, Contract Law, supra n. 1, at 327.

35 See, for example, Pasternak v. Levi, supra n. 31; Brazilai v. Greenbaum, supra n. 31; Avraham v. Chevza, supra n. 34; Zinger v. Kimmelman (1976) 30(i) P.D. 804. The agreements in these decisions were formed before the promulgation of the Contracts (General Part) Law, 1973.

36 HaLevi v. Mukhter (1974) 28 (i) P.D. 519, at 522 — here the court turned to rules concerning supplementation in the Sale Law.

37 The point in time when standard statutory terms began to be broadly used to supplement agreements can not be determined, but it is clear that the courts' propensity to do so became prevalent in the mid 1970's. The outcome of this process is that terms which could not previously have been supplemented were supplemented without restriction. Compare decisions which dealt, for example, with the supplementation of payment conditions such as Barzilai v. Greenbaum, supra n. 31, and Pasternak v. Levi, supra n. 31, with Ovadiah v. Adarbi, supra n. 26 and Zandbek v. Danziger, supra n. 34, at 269. Also, compare decisions that deal with the possibility of supplementing terms involving deferred liens such as Zinger v. Kimmelman, supra n. 35, at 808 with the Ravinai decision, supra n. 26.

38 See, for example, section 46 of the Contracts (General Part) Law, 1973.

39 See M. Deutsch, “Supplementation of Terms in Land Contracts”, supra n. 5, at 248–251.

40 See, for example, Beit Halakah 731 v. Mikasvilli, supra n. 26; Zimler v. Yanitzki (1978) 32 (iii) P.D. 296; the Ravinai decision, supra n. 26; Stam v. Markovitz (1988) 42 (i) P.D. 757; Botkovski v. Gat, supra n. 26; Hassin v. Bellas (1988) 42 (i) P.D. 517; Dovshnai v. Hamami, supra n. 34.

41 On land sales see the broadened list of substantive details in Agassi v. Krivoshi (1955) 9 (i) P.D. 96, at 98; Levi v. Laskovski (1966) 20 (iii) P.D. 589, at 600; Pasternak v. Levi, supra n. 31, at 602; Avraham v. Chevza, supra n. 34, at 741. Compare with the relatively shorter lists appearing in later decisions: Zimler v. Yanitzki, supra n. 40, at 307; the Ravinai decision, supra n. 26, at 288; Bihem v. Haim Ben-Yosef, supra n. 31, at 10.

42 On the inclusion of this detail in the list of essential details see Levi v. Laskovski, supra n. 41, at 600; Pasternak v. Levi, supra n. 31; Kapulsky v. Golan Gardens, supra n. 22, at 296; Levi v. Goldman (1973) 27 (i) P.D. 322, at 323. On the exclusion of this detail from the list of essential details see, for example, the Ravinai decision, supra n. 26, at 288; Goyta v. Weiss, supra n. 31, at 189; Bihem v. Haim Ben-Yosef, supra n. 31, at 10.

43 See Avraham v. Chevza, supra n. 34, at 741; Sherbert v. Schwarzbord, supra n. 31, at 211; Yaret v. Hassin (1987) 41 (i) P.D. 162.

44 A construction exchange transaction is one in which the builder receives land in exchange for one or more of the apartments to be built on that land.

45 See Pasternak v. Levi, supra n. 31, at 620–621. A form of specification is a list of the technical specifications relevant to the building contracted for.

46 The court ruled that in light of the circumstances of the case it is possible that the buyer would have to accept the technical description given by the seller. See Zimler v. Yanitzki, supra n. 40, at 307. This decision broadened the opening for change which began one year after the Pasternak decision; in Parminski v. Sonderov (1975) 29 (ii) P.D. 253. In this case a technical description was included in the preliminary agreement, whereas the area of the apartment and its internal design were excluded. The court ruled that in these circumstances in light of the buyers' right to choose what apartment to buy, the absence of precise technical specifications does not constitute a defect which could affect the validity of the contract (ibid., at 256–257). Compare to Boltman v. Ashkenazi (1967) 21 (ii) P.D. 699; here the court ruled that the area of the apartment is an essential detail which is necessary in order to form a binding agreement. See also Bongim Tzitzak v. The Heirs of Avraham Katz (1978) 32 (ii) P.D. 203.

47 See Rubinstein and Co., Construction v. Louis, supra n. 28, at 595. This case, unlike the other cases, is subject to the Sale (Housing) Law, 1973 (27 L.S.I. 213), which requires the inclusion of technical specifications in certain sales transactions. As a result of this Bechor J., who was one of the judges in this case, expressed the opinion that the Sale (Housing) Law, 1973 declares this detail to be essential, but that in the light of section 5(a) this detail may be supplemented by normative supplementation (ibid., at 599).

48 See Stam v. Markowitz, supra n. 40.

49 Ibid., at 762–763.

50 See Beit Halakah 731 v. Mikasvilli, supra n. 26, at 60; see the Ravinai decision, supra n. 26, at 288.

51 On the requirement of intent to form legal obligation see G. Shalev, Contract Law, supra n. 1, at 91.

52 See Zandbak v. Danziger, supra n. 34, at 267; Botkovski v. Gat, supra n. 26, at 67; Rabinowitz v. Shelev (1986) 40 (iv) P.D. 538–539.

53 See Abramov v. Kidar (1973) 27 (ii) P.D. 498, at 503–504, Shvili v. Zilberberg (1977) 31 (iii) P.D. 380, at 384; Zimler v. Yanitzki, supra n. 40, at 303–304; Landmon v. Kaplen (1978) 32 (i) P.D. 146, at 150; Gadelihu v. Omar (1979) 33 (i) P.D. 533, at 536–537 (Ben-Porath J.).

54 But see recently Botkovski v. Gat, supra n. 26, at 65. Even though that case mentioned the aforesaid presumption, it appears that this decision eased the demands concerning indications of intent to form legal obligation. (See infra). See also Bach J. (in the minority opinion) in Sternfeld v. Starockser (1987) 41 (iii) P.D. 361, at 367.

55 See Harastel v. Atarot Ha'Brith (1969) 23 (i) P.D. 410.

56 See Bergman v. Kalman (1981) 35 (ii) P.D. 338, at 339; Ma'yanot HaGalil HaMarvi v. Tabori (1986) 40 (iv) P.D. 343, at 346.

57 See Maxim Apartments v. Garbi, supra n. 29, at 604–605. Here the court explains that this case is extraordinary.

58 See Neve Am in Ramat Gan v. Elazari, supra n. 30, at 318.

59 Botkovski v. Gat, supra n. 26, at 70.

60 Compare Peretz v. Biton (1976) 30 (i) P.D. 367, at 373; Onison Construction Co. v. Deutsch (1976) 30 (ii) P.D. 398, at 405; Tzarry v. Beit HaDin HaArtzi L'Avodah (1974) 28 (i) P.D. 372, at 384; Meir v. Mizrahi (1983) 37 (iii) P.D. 579, at 583; Shapiro, v. Shedmi (1984) 38 (iv) P.D. 664, at 666; Florian v. Gelnot Carmel (1990) 44 (i) P.D. 504, at 511. The injured party is obviously entitled to prefer damages, and in this regard the Contracts (Remedies for Breach of Contract) Law only equated specific performance and damages. Assuming, however, that enforcement will be the preferred remedy and that damages will be claimed in order to complement enforcement, it can be said that specific performance has become the primary remedy for breach as a result of the Contracts (Remedies for Breach of Contract) Law.

61 Concerning efficient breach see Barton, J.H., “The Economic Basis of Damages for Breach of Contract” (1972) 1 J. Leg. Stud. 277CrossRefGoogle Scholar; Birmingham, R.L., “Breach of Contract, Damage Measure and Economic Efficiency” (1970) 24 Rutgers L. R. 273Google Scholar; Bishop, W., “The Choice of Remedy for Breach of Contract” (1985) 14 J. Leg. Stud. 299CrossRefGoogle Scholar; Goetz, and Scott, , “Liquidated Damages, Penalties, and the Just Compensation Principle: Some Notes on the Enforcement Model for Efficient Breach” (1977) 77 Colum. L. R. 554CrossRefGoogle Scholar; Cooter, Ch. & Eisenberg, M. A., “Damages for Breach of Contract” (1985) 73 Calif. L. R. 1434Google Scholar; Polinsky, A. M., “Risk Sharing Through Breach of Contract Remedies” (1983) 12 J. Leg. Stud. 427CrossRefGoogle Scholar; Shavell, S., “Damage Measures for Breach of Contract” (1980) 11 Bell. J. Econ. 466.CrossRefGoogle Scholar

62 For recent criticism see Friedman, D., “The Efficient Breach Fallacy” (1989) 18 J. Leg. Stud. 1.CrossRefGoogle Scholar

63 Damage in this context refers to out-of- pocket loss.

64 In this subsection, the term “damage”, includes loss of profits.

65 The use of the term “revaluation” in this article is not accurate because my intention is that this term be used to describe in general any system which compensates for devaluation of currency, even though revaluation may be considered as only one such method, which adjusts price to value. However, since the courts have used the term “revaluation” inaccurately, I will follow this line as well. On the distinction between revaluation and other methods of compensation for devaluation see Gilad, I., “On Linkage and Revaluation” (1980) 15 Is. L. R. 79CrossRefGoogle Scholar; Yoran, A., “Linkage or Revaluation or a General Specific Index” (1980) 15 Is. L. R. 106.CrossRefGoogle Scholar

66 Procaccia, U., “Linkage, Revaluation and Interest — Past, Present and Future” (1979) 10 Mishpatim 262Google Scholar; Gross, Y., “Inflation Shock: Linking the Monetary System in Israel” (1984) 33 HaPraklit 53.Google Scholar

67 For a discussion of enforcement conditioned upon revaluation see Hork, M., “Price Revaluation in Contracts” (1981–1982) 8 Iyunei Mishpat 88Google Scholar; Friedman, D., “Revaluation, Damages and Considerations of Unjust Enrichment” (1981) 34 HaPraklit 88.Google Scholar

68 See, for example, The Estate of Herman Halperin v. Kihalat Tzion Americait (1975) 29 (i) P.D. 651; Yekutiel v. Bergman (1975) 29 (ii) P.D. 757.

69 See Hadar Motors v. Gabriel Simon-Tov (1975) 29 (i) P.D. 561; Ovadiah v. Adarbi, supra n. 26; Gilad and Anat v. Fish (1977) 31 (i) P.D. 197.

70 Ovadiah v. Adarbi, supra n. 26; Gilad and Anat v. Fish, supra n. 69; The Estate of Eliza Miller v. Stephania Hotel (1977) 31 (i) P.D. 159.

71 See Hadar Motors v. Gabriel Simon-Tov, supra n. 69; Ofek v. Torikan (1979) 33 (i) P.D. 93.

72 See the Ravinai decision, supra n. 26.

73 See section 3A in the Adjudication of Interest Law, 1961, (15 L.S.I. 214) as amended in Adjudication of Interest (Amendment No. 3) Law (33 L.S.I. 31).

74 See, for example, Lalash v. Melmod (1982) 36 (iv) P.D. 387, at 392; Sharabi v. Kartin Brothers Real Estate Investment (1985) 39 (iv) P.D. 606, at 608.

75 See Novitch v. Leibowitz (1982) 36 (i) P.D. 537, at 550; Ata Textiles v. The Estate of Zolotolov (1987) 41 (i) P.D. 282, at 297 et seq; Hananal v. Sosnovski (1983) 37 (iv) P.D. 471, at 475. See also D. Friedman, “Revaluation, Damages and Considerations of Unjust Enrichment”, supra n. 67. Compare the creation of a similar distinction with regard to statutory obligations in Finkelstein v. Beit HaDin HaArtzi L'Avodeh (1989) 43 (ii) P.D. 395. For a different position see Nodl v. Tzvi Pinto (deceased) (1986) 40 (iv) P.D. 477; Porath v. Caeserea Lands (1990) 44 (ii) P.D. 608.

76 The issue of measure of revaluation must be differentiated from another issue which concerns the method for calculating revaluation. The system selected for calculating revaluation concerns the question of how the court achieved accordance between specific performance during times of inflation and specific performance during times of no inflation. The court considered a few ways to achieve this, but usually chose linkage to the consumer price index as the solution. See Shmueli v. Leavitt (1982) 36 (ii) P.D. 45; Maxim Apartments v. Garbi, supra n. 29; Lulu v. Solomon (1983) 37 (iv) P.D. 70; Geltenstein v. Avraham (1983) 37 (iv) P.D. 113. However the court also found other solutions. See, for example, the Ravinai decision, supra n. 26 in which linkage to the representative dollar exchange rate was used. See Harari v. Vertheimer (1985) 39 (iii) P.D. 660 in which, during part of the revaluation period, linkage to the dollar was incorporated. See Lalosh v. Melmod, supra n. 74, in which linkage to the construction cost index was used. Sometimes the court simply increased the sales price or added interest to it; see Ritberg v. Nissim (1980) 34 (iii) P.D. 314. Finally, the court sometimes resorts to revaluation while creating an equilibrium between the value of money and the value of the property sold; see The Estate of Herman Halperin v. Kihalat Tzion Americait, supra n. 68; Novitch v. Leibowitz, supra n. 75.

77 See Asbir v. The Committee for the Order of Evangelical Episcopalians (1981) 35 (ii) P.D. 1.

78 See Mimoni v. Pearlman (1982) 36 (ii) P.D. 319, at 333.

79 See Ritberg v. Nissim, supra n. 76, at 326.

80 See Novitch v. Leibowitz, supra n. 75, at 551.

81 In Shmueli v. Leavitt, supra n. 76, the court linked to the index only IL 80,000 of the IL 111,000 sales price (which had not yet been paid). Linkage, at a rate of 70%, was given, for example, in Lalosh v. Melmod, supra n. 74. See also Maxim Apartments v. Garbi, supra n. 29, Gelfenstein v. Avraham, supra n. 76. For linkage at a rate of 60% see Lulu v. Solomon, supra n. 76. See also Ezra v. Magrobi (1983) 37 (iv) P.D. 565. For linkage at a rate of 50% see Harari v. Vertheimer, supra n. 76. For decisions, issued after the Novitch v. Leibowitz case, in which full revaluation is allocated see Tadher v. Markowitz (1985) 39 (ii) P.D. 813. Also in the Sharobi v. Kartin case, supra n. 74, at 609, the court decided not to interfere in the District Court's decision to allocate full revaluation. Although, the court did add that if it had heard the case as one of first instance the outcome of the case may have been different.

82 See, for example, Maxim Apartments v. Garbi, supra n. 29, at 610. See also D. Friedman, “Revaluation, Damages and Considerations of Unjust Enrichment”, supra n. 67, at 95–97.

83 See, for example, Shmueli v. Leavitt, supra n. 76, at 55–56; Harari v. Vertheimer, supra n. 76, at 671; Novitch v. Leibowitz, supra n. 75, at 551; Kvay v. Mordechai Israel (1989) 43 (iv) P.D. 212, at 219.

84 See Harari v. Vertheimer, supra n. 76.

85 For a discussion on the adaptation of these remedies to inflation see Ben-Oliel, R., “Determining the Time to Estimate the Measure of Damages and Restitution — Considerations in Light of Inflation” (1988) 38 HaPraklit 60.Google Scholar

86 See Berman v. Ya'ir (1981) 35 (ii) P.D. 701, at 711.

87 Compare to Eilan Rahamim Construction v. Tabik (1983) 37 (ii) P.D. 77; Yavetz v. Mediterranean Sea Car Dealers (1984) 38 (iv) P.D. 85; Hasid v. Parzot (1985) 39 (iv) P.D. 451; Brena Creations v. Denia (1988) 42 (ii) P.D. 793.

88 See, for example, Solel v. Zuckerman (1988) 42 (ii) P.D. 625; Haronian v. The Estate of Moshe Chaliphah (deceased) (1985) 39 (iv) P.D. 20.

89 See Yehuda Sinai Investments v. Israel Fishell (1986) 40 (iv) P.D. 319, at 329; Harspinkel, Ltd. v. Goldstein (1988) 42 (i) P.D. 286, at 291.

90 This gap is emphasized by the fact that both agreed damages and price conditions in the contract are consensual terms.

91 See, for example, Berkowitz v. Klimer (1982) 36 (iv) P.D. 57; Kanny Spear v. Ahuzat Eyal (1986) 40 (iv) P.D. 68; Amitay Milon Yerushalim v. Teek (1986) 40 (iii) P.D. 169.

92 Alhanani v. Rafael (1981) 35 (i) P.D. 701, at 718.

93 Kalanit HaSharon v. Horowitz (1981) 35 (iii) P.D. 533.

94 Ibid., at 547. The court suggests two solutions to this problem: first, determining the measure of revaluation according to the actual investment; second, to award damages for the injury incurred. In these circumstances, the court chose a third solution: the court viewed an liquidated damages clause as sufficient compensation also for injury resulting from inflation.

95 See Fishell Eisman v. Orioli (1987) 41 (ii) P.D. 421; Avidan v. Ben-Chemo (1987) 41 (iv) P.D. 78; Avdani v. Cassuto (1983) 37 (i) P.D. 701. The injured party's obligation to make restitution to the party perpetrating breach is relevant for our purposes because of the “identity of the payer”. Compare to Harari v. Vertheimer, supra n. 76; there the court referred to the obligation of the party perpetrating breach to make restitution to the injured party.

96 Avdani v. Cassuto, ibid., at 707.

97 See Fishell Eisman v. Orioli, supra n. 95, at 430.

98 Ibid., at 443.

99 See supra n. 93, at 539–541; Berkowitz v. Klimer, supra n. 91, at 67; Adras Construction Supplies v. Harlow and Jones (1988) 42 (i) P.D. 221, at 249. For a different opinion see Cohen, Y. J. in Agencies (Car Rental), Ltd. v. Tarblues (1979) 33 (i) P.D. 197Google Scholar, at 204.

100 See supra n. 93, at 539–541; Lipkin v. Dor HaZahav (1985) 39 (iii) P.D. 85, at 95; Amitay Milon Yerushalim v. Teek, supra n. 91, at 213–214. See Adras Construction Supplies v. Harlow and Jones, supra n. 99, at 241; Kasam v. Matosian (1987) 41 (iii) P.D. 678, at 689 (Ben-Porath J.).

101 Another possible explanation is related to the nature of revaluation in the remedies of restitution and specific performance. Revaluation in the case of specific performance is the result of judicial discretion. The exercise of this discretion is dependent on a variety of considerations which may include the deterrence of breach. By contrast, revaluation in the case of restitution is dependent, to some extent, on the type of property involved. It is then questionable whether the courts are authorized to exercise discretion with regard to the measure of revaluation. Compare Fishell Eisman v. Orioli, supra n. 95, at 430.

102 Thus, for example, it is questionable whether the defences in the Unjust Enrichment Law, 1979 (33 L.S.I. 44) (sections 2 and 3) are applicable to restitution in the law of remedies. For a discussion of this issue and others see Friedman, D., “Principles of Unjust Enrichment Law in Light of New Israeli Legislation” (1981) 8 Iyunei Mishpat 22Google Scholar. See also Mazoz, M., “Circumstances Under Which Restitution is Unjust — Section 2 of the Unjust Enrichment Law, 5739–1979” (1980) 10 Mishpatim 487Google Scholar, at 530 et seq.; Tedeschi, G., “Some Aspects of ‘Unjust Enrichment’” (1981) 11 Mishpatim 385Google Scholar, at 398 et seq.

103 Harlow and Jones v. Adras Construction Supplies (1983) 37 (iv) P.D. 225.

104 Zeigel v. Rozner (1983) 37 (iv) P.D. 29.

105 See Adras Construction Supplies v. Harlow and Jones, supra n. 99. For a discussion of this decision see Friedman, D., The Revised Edition of the Law of Unjust Enrichment (Tel Aviv, 1989, in Hebrew) 64–69Google Scholar; Friedman, D., “Restitution of Profits Gained by Party in Breach of Contract” (1983) 104 L.Q.R. 383.Google Scholar See also Friedman, D., The Law of Unjust Enrichment (Jerusalem, 1982, in Hebrew) 299–305.Google Scholar

106 There are two exceptions to Levine J.'s ruling: first, if the contract directly or indirectly prohibits making a claim of enrichment. Second, if the claim of enrichment does not conform to obligations set down by the contract. In other words, the circumstances of the situation must be examined in order to determine if there is any reason why a claim of enrichment would be prohibited, e.g., the plaintiff failed to fulfill his contractual obligations, or if he still has not made restitution of benefits received from the other side, etc. Harlow & Jones case, supra n. 99, at 241–242.

107 There are three exceptions to Barak J.'s ruling: first, if there is a direct or implied agreement between the parties prohibiting claims of enrichment resulting from the contract between them; second, if the injured party receives unjust enrichment as a result of joining together these two claims; third, if the essence of claim contradicts the basic assumptions on which the lawsuit is based. Harlow & Jones case, supra n. 99, at 269–270.

108 Ibid., at 272.

109 The one exception to this is when there is a logical, inherent contraditction between the remedies. See ibid., at 281.

110 Ibid., at 249 et seq. I am not convinced that Ben-Porath J. believes that in these circumstances the suit can be based on rules governing specific performance or the laws of unjust enrichment.

111 Ibid., at 259.

112 Even though in the Harlow and Jones case the injured party experienced no loss (at least none was proved) it still appears that the rule can be applied a fortiori even when damage was incurred to the injured party as a result of breach. A further question is whether in the light of what was just said, the Harlow and Jones rule is limited to alternative suits based on either the law of unjust enrichment or the law of contractual remedies. I believe the answer to this question is negative at least from the perspective of the positions taken by Barak J. and Bach J. See ibid., at 269, 281.

113 See ibid., at 262 et seq; see also D. Friedman, “Principles of Unjust Enrichment Law in Light of New Israeli Legislation”, supra n. 102, at 44–45.

114 See, for example, Farnsworth, E.A., “Legal Remedies for Breach of Contract” (1970) 70 Colum. L. R. 1145CrossRefGoogle Scholar; “Your Loss or My Gain? The Dilemma of the Disgorgement Principle in Breach of Contract” (1984–1985) 94 Yale L. J. 133; G. Tedeschi, “Some Aspects of ‘Unjust Enrichment’”, supra n. 102.

115 See Adras Construction Supplies v. Harlow and Jones, supra n. 99, at 235, 273.

116 See ibid., at 237, 277–279, 283.

117 Section 3(4) of Contracts (Remedies for Breach of Contract) Law, 1970 (25 L.S.I. 11).

118 Out of 20 cases in which this claim was made it was accepted in only five of them: see Eilan Ofek v. Mortoza Torikan (1979) 33 (i) P.D. 93; Malchin v. Geer (1979) 33 (iii) P.D. 773; Kasem v. Kasem (1983) 37 (iii) P.D. 60; Tzadekah v. HaCohen (1983) 37 (iv) P.D. 313; David v. Yassin (1987) 41 (iv) P.D. 651.

119 See Eilan Ofek v. Mortoza Torikan, supra n. 118; Malchin v. Geer, supra n. 118. In these two cases, this consideration was not the sole consideration which determined the outcome of the case. In the third case, David v. Yassin, supra n. 118, relative damage was a dominant factor. In this case, land which was sold had on it moss which damaged certain kinds of crops. The court refused to order the infected soil to be exchanged for usable soil because it felt that the infected soil could be treated and purified. Therefore, the court obligated the party that breached the contract to pay the injured party the cost of the purification process. In the light of this, it can be said that this decision is a quasi-enforcement order designed to neutralize the effect of the breach.

120 Section 18 of the Contracts (Remedies for Breach of Contract) Law, 1970.

121 See G. Shalev, Contract Law, supra n. 1, at 517. This claim was raised more than 15 times, but was never accepted. In only one instance, in which impossibility of performance was not proven, the court assumed the existence of impossibility of performance based on the respondent's admission. See Simchon v. Redding (1975) 29 (ii) P.D. 610.

122 Perdue and Fullers' article from 1936, supra n. 11, is considered the first cornerstone demonstrating the connection between the basis of obligation — promise, reliance or enrichment, and the scope of obligation — expectancy, reliance and restitution damages. An evaluation of this connection is found today mainly in the writings of P.S. Atiyah. See generally The Rise and Fall of Freedom of Contract (Oxford, 1979); Promises, Morals and Law (Oxford, 1981); Essays on Contract (Oxford, 1986).

123 My use of the terms “theory” and “principle” in this article is not necessarily similar to the way in which these terms are generally used in law. The term “principle” is sometimes used to describe general standards as opposed to specific rules. See, for example, Dworkin, R., Taking Rights Seriously (Cambridge, 1972) 22.Google Scholar The term “theory” is commonly used to discuss different jurisprudential questions. See Salmond, On Jurisprudence (12th ed., 1966) 6. My use of these terms is different, but I shall define these terms for the purposes of this article.

124 See supra n. 11.

125 Thus, for example, the distinction between expectancy and restitution is blurred when restitution in kind can not be made, and only the monetary value can be offered. The obligation to make restitution of property or money received as a result of making a contract may derive from the principle of restitution, but at the same time it may protect the principle of reliance. Finally, damages calculated to include market price differences may derive from both the principle of expectancy and the principle of reliance which recognizes injury incurred by the loss of an alternative deal.

126 Compare Adras Construction Supplies v. Harlow and Jones, supra n. 99, at 267.

127 Section 21 of Contracts (General Part) Law, 1973.

128 Ibid., section 31.

129 Take, for example, the rule that “when the obligation is to give property or a service whose type and character is not agreed upon, an intermediate definition of the property or the service will be used” (section 45 of Contracts (General Part) Law). The significance of this rule is that if the promisor does not fulfil his obligation he will breach the contract, and the law of remedies which protects different interests will be implemented. The part of contract law which may result in non-contractual consequences concerns the prerequisites for formation of a contract. The existence of these prerequisites results in the creation of a contract which, if not performed, will be subject to the consequences of breach. If these prerequisites do not exist then a contract will not be formed and any damages or enrichment resulting from the situation will be handled by tort law and the law of unjust enrichment.

130 The question why the principle of expectancy is the main interest protected by laws governing breach is equivalent to the question why and on what conditions this scope should be accorded to contractual liability. In other words, what kind of contract justifies such recognition.

131 Thus, the question why the consequences of mistake can be only an obligation to make restitution is equivalent to the question why and in what conditions a mistake should be recognized. In other words, why should a mistake result in the rather moderate consequence of restitution.

132 As I have stated above, I propose to differentiate between the question of protected principles and the question of the theoretical concepts behind them. Therefore, we can agree that the principle of expectancy is the main principle protected by damages for breach, and at the same time think that the idea of reliance explains the recognition of the principle of expectancy. See Fuller and Perdue, supra n. 11, who explain that the difficulty in estimating the scope of reliance and the desire to deter damage caused by reliance may justify the award of expectancy damages. See ibid., at 60 et seq. See also Atiyah, P.S., The Rise and Fall of Freedom of Contract, supra n. 122, at 764.Google Scholar

133 On the term efficiency in the economic approach to law see Coleman, S.L., “Efficiency, Auction and Exchange” (1980) 68 Calif. L. R. 221CrossRefGoogle Scholar; “Efficiency, Utility and Wealth Maximization” (1980) 8 Hofstra L. R. 509. Both articles were published with some changes in Coleman, J. L., Markets, Morals and the Law (1988) 67Google Scholaret seq.

134 See the articles in supra n. 61. Also, according to the approach which sees expectancy damages as providing the right incentive for both performance and breach, expectancy damages are not ideal as far as distributing risk between the sides is concerned. See Shavell, S., “The Design of Contracts and Remedies for Breach” (1984) 99 Q. J. Econ 121CrossRefGoogle Scholar; Polinski, “Risk Sharing Through Breach of Contract Remedies”, supra n. 61.

135 Fried, C., Contract as Promise (Cambridge and London, 1980) 17.Google Scholar

136 See, for example discussions by supporters of the economic approach of the doctrine of unconscionability: Epstein, R.E., “Unconscionability: Critical Reappraisal” (1975) 18 J. Law and Econ. 293CrossRefGoogle Scholar; Schwartz, A., “A Reexamination of Nonsubstantive Unconscionability” (1977) 63 Va. L. R. 1053.CrossRefGoogle Scholar Concerning the necessity of expectancy damages see Atiyah, P.S., “Executory Contracts, Expectation Damages and the Economic Analysis of Contract”, in Essays on Contract, supra n. 122, at 150.Google Scholar

137 For the distinction between these two aspects in the context of the economic approach to law see Michelman, F. L., “Norms and Normativity in the Economic Theory of Law” (1968) 62 Minn. L. R. 1015.Google Scholar

138 For a discussion of this question see Posner, , “The Ethical and Political Basis of the Efficiency Norm in Common Law Adjudication” (1980) 8 Hofstra L. R. 487Google Scholar; “Utilitarianism, Economics and Legal Theory” (1979) 8 J. Leg. Stud. 103; “The Value of Wealth: A Comment on Dworkin and Kronman” (1980) 9 J. Leg. Stud. 243; Dworkin, R.M., “Is Wealth a Value?” (1980) 9 J. Leg. Stud. 191CrossRefGoogle Scholar; Kronman, A.T., “Wealth Maximization as a Normative Principle” (1980) 9 J. Leg. Stud. 277.CrossRefGoogle Scholar For a general discussion see “The Symposium on Efficiency as a Legal Concern” (1980) 8 Hofstra L. R., issues nos. 3 and 4.

139 See, for example, Macneil, I.R., “The Many Futures of Contracts” (1974) 47 So. Cal. L. R. 691Google Scholar; Atiyah, P.S., “The Modern Role of Contract Law”, in Essays on Contract, supra n. 121, at 5.Google Scholar

140 See, for example, supra n. 135, at 25–26, 69 et seq.

141 See, for example, the presentation of theories by Barnett, R.E., “A Consent Theory of Contract” (1986) 86 Colum. L. R. 269CrossRefGoogle Scholar and compare with that of C.-Fried in supra n. 135, at 2–5.

142 See Posner, R.A., Economic Analysis of Law, (Boston and Toronto, 3rd ed., 1986) 79et seqGoogle Scholar; Kronman, A.T. & Posner, R.A.: The Economics of Contract Law (Boston and Toronto, 1979)Google Scholar; Polinsky, A.M., An Introduction to Law and Economics (Boston and Toronto, 1983) 25–26, 57–63Google Scholar; Cooter, R. & Ulen, T., Law and Economics (London, 1988) 212 ff.Google Scholar

143 Historically, this theory is known as the classical will theory. See Pothier, M., A Treatise on the Law of Obligations (1761–1764; English trans. 1826)Google Scholar; Pollock, , Principles of Contracts (London, 6th ed., 1894)Google Scholar; Langdell, , A Summary of the Law of Contracts (Boston, 2nd ed., 1880).Google Scholar A modern reflection of this theory is found in C. Fried, Contract as Promise, supra n. 135. The use of the concept of promise in this article is not meant to distinguish it from the concept of agreement. The concept of agreement is not meant to annul the approach which says that a contract is an exchange of promises. The concept of promise is not meant to cancel the requirement demanding agreement of the promisee. See Tedeschi, G., “Some Aspects of the Concept of Contract” (1966) 1 Is. L.R. 223Google Scholar; Shalev, G., Contract Law, supra a. 1, at 6–7.Google Scholar The question which is relevant for us here is what concept explains the binding force of promises or agreements. The idea of promise presents one answer concerning the moral value of the intention which is to become binding. In this respect the concept of promise is also relevant to the approach which sees a contract as an agreement.

144 See G. Gilmore, The Death of a Contract, supra n. 3; P.S. Atiyah, The Rise and Fall of Freedom of Contract, supra n. 122; Fuller and Perdue, supra n. 11; Henderson, S.D., “Promises Grounded in the Past: The Idea of Unjust Enrichment and the Law of Contracts” (1971) 57 Va. L. R. 1115CrossRefGoogle Scholar; Henderson, S.D.. “Promissory Estoppel and Traditional Contracts Doctrine” (1969) 78 Yale L. J. 343.CrossRefGoogle Scholar

145 See Kronman, A.T., “Contract Law and Distributive Justice” (1980) 89 Yale L. J. 472CrossRefGoogle Scholar; Kennedy, D. A., “Form and Substance in Private Law Adjudication” (1976) 89 Harv. L. R. 1685CrossRefGoogle Scholar; Johnson, C.D., “The Idea of Autonomy and the Foundations of Contractual Liability” (1983) 3 Law and Philosophy 271CrossRefGoogle Scholar; Sadursky, W., “Social Justice and Legal Justice” (1984) 3 Law and Philosophy 329.CrossRefGoogle Scholar

146 See P.S. Atiyah, “The Liberal Theory of Contract”, in Essays on Contract, supra n. 122, at 123 et seq; Fried, C., Contract as Promise, supra n. 135, at 21Google Scholaret seq.

147 But compare Schwartz, A. “The Case for Specific Performance” (1979) 89 Yale L. J. 271.CrossRefGoogle Scholar The author feels that the use of the specific performance remedy must be broadened for reasons of efficiency.

148 This approach can also protect the reliance interest by using the principle of expectancy, among other things, in order to deter breach; see supra n. 132. At first glance similar logic may be used in relation to the principle of fulfilment, but it appears that this approach will undermine any justification respecting the implementation of the principle of fulfilment. This is so because: firstly, the deterrence consideration is not central to this approach, but actually is one of the many considerations relevant as far as expectancy, alone, is concerned; secondly, and more importantly, the “reliance approach” does not easily justify the principle of expectancy which is viewed at times as too broad. It is therefore hard to assume that this approach would have justified the principle of fulfilment. Compare Atiyah, P.S., “Contracts, Promises and the Law of Obligations”, in Essays on Contract, supra n. 122, at 10Google Scholar; “Executory Contracts, Expectation Damages and the Economic Analysis of Contract”, ibid., at 150.

149 True, the consequence of this principle is distributive in that it allocates to the injured party a right that was not previously available to him, but the criterion incorporated in order to allocate this right is not distributive in character, at least as far as the term “distributive” in the framework of contract law is concerned. In other words, the principle of performance was not meant to achieve a fairer distribution of wealth in society.

150 It may be that even as far as this approach is concerned, the principle of expectancy is preferable. Compare Fried, supra n. 135, at 17. This approach which is based on the autonomy of the will, may support minimal interference in an individual's liberty. In the light of this fact, the damage remedy may be preferable to the specific performance remedy, and the principle of expectancy may be preferable to the principle of fulfilment. Despite this, among all of the different theoretical approaches this one is the closest to the rationale of the principle of fulfilment. Compare P.S. Atiyah, “The Liberal Theory of Contract”, supra n. 122, at 124. Atiyah explains that specific performance, and not expectancy damages, is the natural remedy for the concept of promise.

151 Compare Rosenberg v. Rubinstein (1984) 38 (iii) P.D. 689, at 696; Brown v. Mandy's Tours (1979) 33 (ii) P.D. 437, at 441; Bihem v. Haim Ben-Yosef, supra a. 31, at 10; Grossman and K.B.K. v. The Estate of Biderman, supra n. 21, at 789.

152 It appears that out-of-pocket loss (regardless of whether the other side is enriched or not) is not a dominant factor in the relaxation trend. Firstly, there are decisions that recognize that in certain circumstances there can be an easy entrance into contractual obligation even without the existence of damage of any type. See, for example, Shikun Ovdim v. Zafnik, supra n. 26; Botkovski v. Gat, supra n. 26. Secondly, in instances where there was damage, the damage was not significant. See, for example, the Ravinai decisions, supra n. 26; Zimler v. Yanitzki, supra n. 40. Thirdly, there are decisions which refuse to recognize the existence of a contract despite the fact that the injured party experienced out of pocket loss. See, for example, Ellision v. Yahlomi, supra n. 31.

153 However, culpability in this instance may provide a partial explanation for the developments in good faith. Notwithstanding this fact, trends which directly ease the demands surrounding conditions for the formation of a contract are not necessarily characterized by the special culpability of the side denying the existence of a contract.

154 If this is the element of fault we are assuming that which we want to know. Refusing to fulfil a representation is a sign of guilt only if the representation is binding, and not vice versa.

155 See Englard, Y., Barak, A. and Cheshin, M., The Law of Civil Wrongs: The General Part, Tedeschi, G. ed., (Jerusalem, 2nd ed., 1976, in Hebrew) 579Google Scholaret seq.

156 See G. Shalev, Contract Law, supra n. 1, at 578–579. But compare to the development of the “bad faith breach of contract” tort in American law, which allows the courts to award punitive damages for breach of contract. This tort was first recognized in the field of insurance contracts, but there is a tendency to expand it to include regular commercial contracts. See Monagham, J., “Extending the Bad Faith Tort Doctrine to General Commercial Contracts” (1985) 65 Boston U. L. R. 355Google Scholar; Chutorian, S., “Tort Remedies for Breach of Contract: The Expansion of Tortorious Breach of the Implied Covenant of Good-Faith and Fair Dealing into the Commercial Realm” (1986) 86 Colum. L. R. 377CrossRefGoogle Scholar; Curtis, L., “Damage Measurements for Bad Faith Breach of Contract: An Economic Analysis” (1986) 39 Stan. L. R. 161CrossRefGoogle Scholar; Katz, S.B., “The California Tort of Bad-Faith Breach, The Dissent in Seaman's v. Standard Oil, and the Role of Punitive Damages in Contract Doctrine” (1987) 60 So. Cal. U.L.R. 509.Google Scholar

157 An example of this is the tort of bad faith breach of contract mentioned in n. 156 supra.

158 See, generally, Bar-Shira, A., “Negligent Representation” (1971–1972) 27 HaPraklit 490Google Scholar; Kaplan v. Nobogretzki (1984) 38 (iii) P.D. 477; American Microsystems Inc. v. Elbit Computers (1985) 39 (ii) P.D. 785.

159 See Fuller and Perdue, “The Reliance Interest in Contract Damages”, supra n. 11, at 56. Their idea concerning the superiority of restitution to reliance is based on the concept of equilibrium taken from Aristotle's Nicomachean Ethics 1132a–1132b.

160 This suggestion is based on assumptions so general that there are bound to be inaccuracies. Despite this, I feel that there is some truth to it.

161 Supra n. 155, at 128 et seq.

162 This point is similar, but not identical, to the concept of exit from obligation as explained by Gilmore in supra n. 3. Although it can be said that the laws of impossibility of performance like the rules governing vitiating elements in contract, allow for exit from contractual responsibility (as determined by their consequences), the legislative approach behind the Israeli doctrine of impossibility of performance is one of breach. Therefore, on the face of it, it appears that the rules of impossibility of performance can be disconnected from other rules found in the Contracts (General Part) Law which allow release from contractual obligation without requiring a breach to have occurred. For the position stating that impossibility of performance should be handled by the Contracts (General Part) Law see Shalev, G., “General Comments on Contracts (General Part) Law, 1973” (1974) 9 Is. L. R. 274.Google Scholar

163 This position is derived from the approach that the law of remedies determines the scope of contractual rights and obligations and not vice versa. The origin of this position can be found in the legal realism of the 1920's and 1930's (see Purcell, , The Crisis of Democratic Theory [Kentucky, 1973] 74Google Scholaret seq.). In contract law this approach can be seen in Fuller and Perdue's article, supra n. 11. For a different approach in Israeli law see Friedman, D., “Remedies for Breach of Contract” (1973–1974) 3 Iyunei Mishpat 134.Google Scholar See also, Even, D., “The Significance of the ‘Right’ to Remedies for Breach of Contract” (1978) 6 Iyunei Mishpat 121.Google Scholar

164 This position must be distinguished from the famous statement made by Holmes, “The only universal consequence of a legally binding promise is that the law makes the promisor pay damages if the promised event does not come to pass” (Holmes, , The Common Law [1881; Howe, ed., 1963] 236).Google Scholar Holmes felt that the performance of a promise is not part of the obligation placed on the promisor. This approach certainly is not true of Israeli law in which specific performance is the central remedy for breach of contract. Anglo-American law has also gone in this direction since Holmes' statement.

165 See section 10 of Contracts (Remedies for Breach of Contract) Law, 1970.

166 Ibid., section 18.

167 Compare, for example, Maxim Apartments v. Garbi, supra n. 29.

168 See, for example, the Ravinai decision, supra n. 26; Zimler v. Yanitzki, supra n. 40; Botkovski v. Gat, supra n. 26.

169 Take, for example, the idea of broadening the remedies for breach of good faith during negotiation which is still not widely held among the judges in the Supreme Court. See Cohen v. Cori (1987) 41 (ii) P.D. 778; Ragomi v. Arrat Insurance (1985) 39 (i) P.D. 617.

170 Reliance here refers to all cases, whether or not the other party is enriched.

171 Compare supra n. 135, at 9–12.

172 Compare Zaltzman, N., “Negligent False Statement During Negotiations” (1980–1981) 8 Iyunei Mishpat 55Google Scholar; Kaplan v. Nobogretzki, supra n. 158; American Microsystems Inc. v. Elbit Computers, supra n. 158.