Shabbat Parashat Vayechi 5786

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

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 – two sales agreements to buy a new apartment at a subsidy and two fee agreements. [We have already discussed which agreements are valid and now will deal with some ancillary issues.]. Pl demands his fee and benefits, which the sides dispute.

Ruling: Impact of def’s non-payment – Def claims that pl was disqualified from his rights to an apartment at a discount because he did not pay the first installments. Beit din disagrees, as once the project got bogged down, one cannot expect a potential investor to invest money that can easily be lost. This is among the things that can be assumed simply without a formal condition (see Tosafot. Kiddushin 49b). Therefore, pl’s option is still in place, and pl must pay the first installments only when the project looks to be progressing.

Linkage of the apartment’s price to a building index: The agreement says that pl will pay 1.7 mil. NIS for the apartment, which par. 5 links to the building index. However, the clause also states that pl is exempt from linkage if there is a significant delay attributable to def. The agreement between pl and def1 states that def1 is responsible to pay for all of the taxes and fees relating to the building. Since the project was stalled because def’s members argued over apportioning taxes payment between them, def is to blame for the delay. Therefore, pl is exempt from linkage increases during the time of the delay.

Payment to pl for work done: Pl claims that since the value of the discount on buying one of the project’s apartments was approximately 2.5 mil. NIS, he should get that sum as a fee even before the project is completed. Def claim that pl only did a small part of what a project manager does, and that he did not do it well. Although beit din did not accept the fee contracts, pl claimed they are valid. Since according to these agreements, pl is to get much less than the amount he is asking for now, his claim is illogical considering the project has not progressed. As a ruling based on compromise, pl is to receive 2% of all that def will receive from buyers for the project.

Personal responsibility of the members of def: The three partners of def do not want to accept personal responsibility for any payment to pl, claiming that any payment can come only from the project’s finances. However, they are not yet a corporation (without personal liability). They tried to receive such status, but in the meantime were rejected because of flaws in their reporting and complaints of creditors. In this case, since def1 initially obligated herself as an individual and def accepted all of def1’s related responsibilities, it is unreasonable to deny personal responsibility.

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