A significant judgment which deals with issues of restrictive
arrangement has been given recently.
The district court nullified an agreement signed more than four
decades ago, because the parties to the agreement set up a
restrictive arrangement therein.
A Company named "Shar Fuels and Lubricants Ltd."
petitioned the District Court to nullify an agreement signed in
1973 between it and Sonol Israel Ltd. for the establishment and
operation of a fuel station in Haifa.
According to the Statement of Claim, the Company petitioned the
court to nullify the agreement on the grounds that the agreement is
illegal, since it includes, inter alia, exclusivity
stipulations and price fixing, which constitute restrictive
arrangements pursuant to the Restrictive Trade Practices Law.
Sonol pleaded in its Statement of Defense that Shar had acted
after lengthy delay and with malafides, since it
had operated for many years according the stipulated restrictions,
which makes the arrangement legal. Sonol further pleaded that the
agreement should not be voided, but rather only the restrictive
In its judgment, the Court cited section 19 of the Contracts
Law, which prescribes that, if it is possible to split the contract
into sections, and the cause for nullification concerns only one of
its sections, then it is permissible to nullify only that
Nevertheless, the court ruled that the entire agreement should
be nullified, since it is not possible to isolate the restrictive
clauses in the specific agreement between Shar and Sonol from the
other clauses in the agreement, as they constitute a single
This judgment constitutes a warning sign and adds sanctions that
may be imposed on parties to a restrictive arrangement, by virtue
of the Contracts Law, coupled with the ramifications of drawing up
such an arrangement in violation of provisions of the Restrictive
Trade Practices Law.
Originally published on December 13, 2016
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