Does war excuse a company from performing a contract under Israeli law?

Frustration (sikul) does not make the breach lawful or automatically end the contract. Under Section 18(a), a breach caused by frustrating circumstances simply cannot ground a claim for enforcement or damages. Section 18(b) then gives the court discretion to order restitution of what each party received and to allocate reasonable expenses spent on performance. Courts apply the test narrowly. Rising costs, currency swings and staff shortages caused by reserve-duty call-ups are unlikely to qualify on their own, while a specific government order that directly blocks the precise performance, such as the closure of the relevant site or port, stands a better chance.

Because Section 18 is so narrow, the contract usually decides the outcome. Israeli courts enforce a force majeure clause according to its wording, so a clause that names war, rocket fire, Home Front Command restrictions or the mobilization of key staff, and sets notice and suspension periods, protects far more than the statute. Foreign companies often assume that a force majeure doctrine applies by default, as it does in several civil-law systems. A party that simply stops performing risks cancellation of the contract and a damages claim, and prolonged silence toward the other side can breach the duty of good faith. Our guide to force majeure in Israeli contracts covers how such clauses are drafted.

From the full guide: Force Majeure in Israeli Commercial Contracts

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