¹ The Law came into force on March 27, 1971. Sefer HaHukim No. 610 p. 16. For the full text of the Law see infra p. 135.

² “Compensation is the only law of contract”, as stated in Jacquith v. Hudson, 5 Mich. 123 (1858) cited in (1962–3) 72 Yale L.J. 723).

³ Contracts (General Part) Law, 1970, (1969–70) Hatza'ot Hok No. 880, p. 129.

⁴ “Where a party to the contract indicates his intention not to perform it or where it appears from the circumstances that he will be unable or unwilling to perform it, the other party is entitled to the remedies under this Law even before the time fixed for performance of the contract; but the Court shall not in making an enforcement order, direct that an obligation shall be carried out before the time fixed for its performance.”

⁵ Secondary remedies, (lien, sec. 19 and set-off, sec. 20) will not be discussed here.

⁶ Cheshire, and Fifoot, , Law of Contract (7th ed., 1969) 530.Google Scholar

⁷ Bradley v. Newsom [1919] A.C. 16, 53–4.

⁸ As Prof.Tedeschi, defines it in his article “The Notarial Notice and the English Law on Breach of Contract” (1963) 19 HaPraklit 24.Google Scholar

⁹ As distinguished from its marginal note.

¹⁰ Cf., Harold Wood Brick Co. v. Ferris [1935] 2 K.B. 198, 205–6.

¹¹ If the “other party” chooses to keep the contract alive, and sues at the time fixed for performance, he may bring a claim in debt, and is not restricted to an action for damages. As to the concept of debt, see: Levontin, A.V., “Debt and Contract in the Common Law” (1966) 1 Is.L.R. 60.Google Scholar

¹² As to the meaning of “fundamental breach” in this context, see infra p. 130.

¹³ And give a proper notice to the party in breach: sec. 8 of the Law.

¹⁴ Cf., Heyman v. Darwins [1942] A.C. 356, 361; Mayson v. Clouet [1924] A.C. 980, 984; Tavor v. Ben-Zion, (1949) 5 P.D. 838, 912.

¹⁵ See: Technikum v. Adler (1970) (II) 25 P.D. 679, 687. But see also: Nienaber, , “Anticipatory Repudiation: Principle and Policy” (1962) Camb. L.J. 213, 218.CrossRefGoogle Scholar

¹⁶ The following is one of the most difficult problems: When the injured party elects to disregard the anticipatory repudiation and performs the contract in circumstances where he does not need the co-operation of the repudiating party, can he claim payment at the contract rate? This problem arises from the necessity of reconciling the rules of anticipatory repudiation which award the injured party a right of election, with the principle of mitigation of damage. In White v. McGregor [1962] A.C. 413, the majority in the House of Lords gave a positive answer to the above question. To what extent does this decision, which was widely criticized, apply in Israeli Law? Sec. 17 of the Law embodies the rule in Frost v. Knight (1872) L.R. 7 Ex. Ill, which was applied without qualification by the majority in White v. McGregor. But does it follow from this that the rule in White v. McGregor applies in Israel? Sec. 24 states the independence of the Law as follows: “In matters dealt with by this law, Article 46 of the Palestine Order-in-Council, 1922–1947, shall not apply”. This section implies a rejection of the rule in White v. McGregor, on the assumption—which is unbased—that it could have been received by means of Article 46. Owing to the wide interpretation that should be given to this section, an attempt to claim that the right of election on anticipatory repudiation is not a remedy and therefore is not “a matter dealt with by this law” must be rejected. Moreover, sec. 14 reveals that the policy of the legislature is the mitigation of damage, and is thus in line with the view of the minority in White v. McGregor, who preferred the principle of mitigation of damage to the strict rules of election.

¹⁷ Cf., Frost v. Knight (1872) L.R. 7 Ex. 111; Synge v. Synge [1894] 1 Q.B. 466: a wife recovered damages for the anticipatory breach of her husband's promise to leave her a life interest in certain property, although it was uncertain at the time of the action whether she would survive her husband.

¹⁸ See infra p. 137.

¹⁹ Cf., Garnac Grain Co. Inc., v. Faure & Fairclough Ltd. [1968] A.C. 1130, 1140.

²⁰ Treitel, , The Law of Contract (3rd., 1970) 785.Google Scholar

²¹ Frost v. Knight (1872) L.R. 7 Ex. 111, 116.

²² Sec. 14(a) is iui generis, for unlike other sections in this law it does not create a duty of the person in breach, but a “duty” of the injured party towards himself, which we prefer to label as a burden: one is not under a legal duty to mitigate one's loss. The only effect of failing to bear this burden is the reduction of compensation.

²³ Cf., Levontin, A.V., “Debt and Contract in Common Law” (1966) 1 Is.L.R. 60, 82Google Scholar, n. 118. As to this point contrast: White v. McGregor [1962] A.C. 413 (where an action in debt, following non-acceptance of the anticipatory repudiation was successful) and the Israeli case Technikum v. Adler (1970) (II) 25 P.D. 679 (where the injured party had to be content with an action for compensation, as he could not perform his side of the contract without the co-operation of the party repudiating).

²⁴ Contrast sec. 78(1) of the Uniform Law of International Sale of Goods, (published in Unification of Law, Year Book 1964, International Institute for the Unification of Private Law, Rome “Unidroit”, 1965) from which the Israeli Law is derived. This section states as follows: “Avoidance of the contract releases both parties from their obligations thereunder, subject to any damages which may be due”.

²⁵ See: Hain v. Tate & Lyle [1936] 2 All E.R. 597; Heyman v. Darwins [1942] A.C. 356; Hirji Mulji v. Cheong Yue [1926] A.C. 497; Yeoman Credit v. Apps [1962] 2 Q.B. 508. Cheshire, & Fifoot, , Law of Contract (7th ed., 1969) 534–5.Google Scholar For a contrary view, see: Salmond, & Williams, , On Contracts (1945), 559Google Scholar, and Devlin J. in Alexander v. Railway Executive [1951] 2 K.B. 882. Sec. 11 of the Law supports the view that the contract is terminated on rescission, and not retrospectively at the moment of breach, as it fixes the date of rescission as the relevant date for the assessment of damages.

²⁶ The view that the contract ceases to exist on recission is expressed, inter alia, in Suisse Atlantique d'Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale [1966] 2 All E.R. 61, 71, 84, 88.

²⁷ Evidence for this proposition can be deduced from the existence of certain obligations that cannot be terminated on rescission, as they realise their purpose only after breach and rescission. Such are liquidated damages and arbitration clauses.

²⁸ In addition to other techniques used to limit the effect of exemption clauses, such as strict interpretation of the contract and the requirement that notice of the existence of an exemption clause shall be given.

²⁹ The general principle of fundamental breach can be applied in other areas of contract law such as mistake. Cf., Melville, , “The Core of the Contract” (1956) 19 M.L.R. 26.CrossRefGoogle Scholar But the doctrine of fundamental breach developed in English law in the context of exemption clauses, and is discussed primarily in relation to them.

³⁰ Even after the Suisse Atlantique Case [1966] 2 All E.R. 61, which transformed the doctrine of fundamental breach into a mere rule of construction.

³¹ Fundamental breach was authoritatively defined as a breach that produces a situation fundamentally different from anything which the parties as reasonable men could have contemplated when the contract was made: Suisse Atlantique Case [1966] 2 All E.R. 61, 70. This is not the right place to deal at length with the theoretical meaning of fundamental breach.

³² Smeaton Hanscomb & Co. v. Sassoon [1953] 2 All E.R. 1471; Karsales (Harrow) v. Wallis [1956] 2 All E.R. 866; Yeoman Credit v. Apps [1961] 2 All E.R. 281; U.G.S. Finance v. National Mortgage Bank of Greece [1964] 1 Lloyd's Rep. 446.

³³ Sec. 6 of the Law states as follows: … “fundamental breach” means “a breach as to which it may be assumed that a reasonable person would not have entered into the contract had he foreseen the breach and its consequences, or a breach as to which it has been agreed in the contract that it shall be regarded as fundamental…” Only the first and more important of the alternatives mentioned in sec. 6, will be discussed here.

³⁴ A similar principle prevails in Continental law, where any breach, not only a serious one, avails the injured party of rescission. See Sladitz, , “Discharge of Contract by Breach in Civil Law” (1953) 2 Am. J. Comp. L. 334, 351.Google Scholar

³⁵ Cf., Cheshire, & Fifoot, , Law of Contract (7th ed., 1969) 532, n. 2.Google Scholar

³⁶ Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 26.

³⁷ (1968–9) Hatza'ot Hok No. 857, p. 396.

³⁸ For an analytical review of these conditions, see: Shalev, G., “Breach and Rescission of Contract” (1970) 2 Mishpatim 652, at p. 657 et seq.Google Scholar

³⁹ Unless the anticipatory repudiation refers to the date fixed for performance, for time is usually “not of the essence”.

⁴⁰ Sec. 8 abolishes the former distinction between actual and anticipatory breach as regards the rescission procedure (Cf., Silberman v. Kiryat Haim (1966) (I) 21 P.D. 169), although it does not change the law applicable to anticipatory breach in this matter. In English law, as well as according to the Israeli Law, mere inactivity or acquiescence will not be regarded as “acceptance” of the breach: Cranleigh Precision Engineering Ltd. v. Bryant [1965] 1 W.L.R. 1293.

⁴¹ Cf., Technikum v. Adler (1970) (II) 25 P.D. 679, 688.