Contract Dispute Lawyer in Israel
· By Adv. Reut Eliyahu, Advocate & Notary
Breach of contract claims in Israel - demand, cancellation, damages and enforcement of the judgment - for clients in Israel and abroad, handled personally by Adv. Reut Eliyahu. Service in English, Hebrew and Spanish.
Breach claims · Cancellation · Damages · Court claims · Enforcement
Contract disputes in Israel at a glance
A contract dispute in Israel arises when one party does not perform what it agreed to do - it does not pay, does not deliver, or breaks another term of a binding agreement. Under the Contracts (Remedies for Breach of Contract) Law, 5731-1970, the injured party may enforce the contract or cancel it, and claim damages. A precise demand letter often resolves the dispute before it reaches court. Adv. Reut Eliyahu handles commercial and civil contract disputes for Israeli and international clients.
Get an assessment of your claim →What can you do when a contract is breached in Israel?
The injured party may enforce the contract or cancel it, and claim damages in addition or instead - Section 2 of the Contracts (Remedies for Breach of Contract) Law, 5731-1970. Cancellation is made by notice within a reasonable time; for a breach that is not fundamental, an extension to perform must be given first.
- Demand in writing: the breach, the remedy sought and a deadline.
- Give an extension: required before cancelling for a non-fundamental breach.
- Cancel by notice: within a reasonable time after learning of the breach, or after the extension expires.
- Claim in court: enforcement, damages and interest, then enforcement of the judgment.
Every dispute turns on its own contract and facts. Schedule a consultation →
| Remedies | Enforcement or cancellation, with damages in addition or instead (Section 2, Remedies Law, 5731-1970) |
|---|---|
| Enforcement | The primary remedy in Israel, subject to the exceptions listed in Section 3 |
| Fundamental breach | One a reasonable person would not have contracted for had they foreseen it and its results (Section 6) |
| Cancellation | Fundamental breach: may cancel. Other breach: only after an extension to perform (Section 7). By notice, within a reasonable time after learning of the breach or after the extension expires (Section 8) |
| After cancellation | Each side returns what it received under the contract (Section 9) |
| Damages | Loss foreseeable when the contract was made (Section 10), not including loss you could reasonably have prevented (Section 14); interest on a late payment, without proof of damage (Section 11(b)) |
| Limitation period | Seven years from the cause of action (Section 5, Limitation Law, 5718-1958) |
| Which court | Money claims: Magistrates' Court up to NIS 2,500,000 on the day of filing; above that, the District Court (Section 51, Courts Law, 5744-1984) |
| Court fee | 2.5% of a money claim, half on filing and half no later than 20 days before the first evidentiary hearing (Regulation 6, Courts Regulations (Fees), 5767-2007) |
| Foreign plaintiff | The court may order security for the defendant's costs (Regulation 157, Civil Procedure Regulations, 5779-2018) |
| Collecting a judgment | Through the Execution Office, under the Execution Law, 5727-1967 |
Breach of contract in Israel - what happens next
Most businesses and individuals sign contracts in good faith - and most of the time, contracts are honoured. But when a party fails to pay, fails to deliver, or simply walks away from an agreement, the question is what to do next. Some of your rights, such as the right to cancel, have to be used within a reasonable time, so taking advice early keeps more options open and strengthens your position.
Adv. Reut Eliyahu represents Israeli businesses, foreign companies and private individuals in contract disputes. At Eliyahu & Co. Law Office every matter is handled by her personally. When you contact us, you speak directly with the lawyer who will handle your case, from the first call to the end of the matter.
We look at the whole picture and move to litigation only when it is necessary and justified. Often, a well-timed formal letter resolves the dispute without court proceedings.
A client living in the United States hired a contractor to renovate his apartment in Israel, and the contractor did not finish the work. We sued for damages for the breach, and the case ended in a settlement in which the contractor returned most of the amount.
Every case turns on its own facts. This case does not predict the outcome of another.
Breach of Contract Claims
Formal demand letters, pre-litigation assessment, and representation in civil court proceedings for all types of contractual breach - non-payment, non-delivery, and violation of agreed terms.
Cancellation & Restitution
Extension and cancellation notices drafted to hold up in court, and claims for the return of what you paid or delivered (Sections 7-9 of the Remedies Law).
Commercial Negotiations
Legally informed negotiation to resolve disputes without litigation - protecting your rights while preserving commercial relationships where possible.
Litigation & Court Representation
Full representation in the Israeli Magistrates' Court and District Court - from filing the claim through to judgment and enforcement.
💡 Related services: Contract drafting and review before you sign · Civil litigation lawyer in Israel · Ongoing counsel for companies · Business disputes before the court · Property and lease disputes
Since 2007
Practising law in Israel
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Israel & worldwide
Types of Contract Disputes We Represent
Contract disputes arise in every area of commercial and personal life. We handle the full range of contractual conflicts - from straightforward unpaid invoices to complex multi-party commercial disputes.
Unpaid Invoices & Service Fees
Recovery of unpaid amounts for services rendered, goods delivered, or work completed. This is a common form of contract dispute and is often resolved by a lawyer's letter alone. A money debt also carries interest for the period of delay (Section 11(b) of the Remedies Law). If the debt itself is not disputed, see debt recovery and money claims.
Construction & Works Contract Disputes
Disputes between contractors, subcontractors, developers and property owners - including defective work claims, non-completion, cost overruns and withheld payments, read with the Contract for Work Law, 5734-1974.
Supplier & Vendor Disputes
Disputes arising from supply agreements - non-delivery, defective goods, late delivery, pricing disputes, and breach of exclusivity or distribution arrangements.
NDA & Confidentiality Violations
Enforcement of non-disclosure agreements - including urgent injunctions to stop ongoing disclosure, and damage claims for business harm resulting from a confidentiality breach.
Non-Compete & Restraint of Trade Disputes
Enforcement of non-compete clauses in partnership and business sale agreements, and in employment where Israeli law allows it - including injunctive relief and damage claims against parties who breach restrictive covenants.
Shareholder & Partnership Agreement Disputes
Conflicts arising from shareholder agreements and founders' arrangements - including disputes over profit distribution, decision-making rights, exit provisions, and breaches of fiduciary duty.
Cross-Border Contract Disputes
Representing international clients in disputes with Israeli counterparties - including enforcing foreign judgments and arbitral awards in Israel and pursuing Israeli companies through Israeli courts.
Real Estate Contract Disputes
Disputes from property purchase and sale agreements, lease agreements and development contracts. See also our real estate litigation practice.
Not sure whether you have a valid claim?
Tell us what happened and we will tell you where you stand.
From First Contact to Resolution - What to Expect
Every contract dispute is different. What they share: the earlier you take legal advice, the more options you have. Most of the process below can be handled without travelling to Israel.
Free Initial Assessment
You contact us, describe the situation, and share the contract and the main correspondence. We assess your position honestly: whether you have a viable claim, which remedies are realistic, and what strategy makes sense.
Formal Demand Letter
In most cases we begin with a precisely drafted demand letter - setting out the breach, the legal basis, the remedy sought and a deadline. Where cancellation may follow, the letter also gives the extension that the law requires before cancelling for a breach that is not fundamental.
Negotiation & Settlement
If the other party responds, we negotiate on your behalf - with full knowledge of your legal rights. Many disputes settle at this stage on acceptable terms, without the cost of litigation. A settlement paid in instalments should be secured, for example by a guarantee and a clause that makes the whole balance due on default.
Court Proceedings (when necessary)
When negotiation fails, we file a civil claim in the Israeli court with jurisdiction, under the Civil Procedure Regulations, 5779-2018 (in Hebrew). We handle all stages: the statement of claim, procedural motions, evidence, hearings and judgment. You are kept fully informed throughout.
Enforcement
If the judgment is not paid, we open a file at the Execution Office under the Execution Law, 5727-1967 (in Hebrew) - including attachment of bank accounts and seizure of assets - to collect the judgment debt.
💡 Important: the limitation period for most contract claims in Israel is seven years from the date the cause of action arose (Section 5 of the Limitation Law, 5718-1958). The right to cancel runs on a much shorter clock - a reasonable time after you learn of the breach, or after an extension expires - and acting early gives you more options, stronger leverage and lower costs.
When you may cancel a contract after a breach
Cancelling a contract is the remedy clients ask about most, and the one where a wrong step costs the most. The Contracts (Remedies for Breach of Contract) Law, 5731-1970 (in Hebrew) separates two kinds of breach, and each has its own route to cancellation.
A fundamental breach
Under Section 6, a breach is fundamental if it can be assumed that a reasonable person would not have entered into the contract had they foreseen the breach and its results, or if the contract itself declares that breach fundamental. A clause that makes every breach fundamental, without distinction, has effect only if it was reasonable when the contract was made. After a fundamental breach, the injured party is entitled to cancel the contract (Section 7(a)).
A breach that is not fundamental
Here the injured party must first give the breaching party an extension to perform. Only if the contract is still not performed within a reasonable time after the extension may the injured party cancel, unless cancellation would be unjust in the circumstances (Section 7(b)).
Cancellation is made by notice to the breaching party: after a fundamental breach, within a reasonable time after the injured party learns of the breach; after an extension, within a reasonable time after the extension expires (Section 8). A notice sent too late may not take effect, and the contract then stays in force. Once a contract is cancelled, each side must return what it received under it, or pay its value (Section 9).
Damages can be claimed alongside cancellation or enforcement, or instead of them. They cover the loss that, when the contract was made, the breaching party knew or should have known to be a probable result of the breach (Section 10), and non-pecuniary damage where the court finds it appropriate (Section 13). Damages do not cover loss that the injured party could have prevented or reduced by reasonable steps (Section 14), so what you do in the days after a breach can affect the amount you recover.
Three more rules often decide the dispute. Both sides must act in good faith in negotiating a contract and in performing it (Sections 12 and 39 of the Contracts (General Part) Law, 5733-1973). A contract is interpreted according to the parties' intention as it appears from the contract and the circumstances, and where that intention is clear from the wording, according to the wording (Section 25). And where a breach resulted from circumstances the breaching party did not know of, could not reasonably have foreseen and could not have prevented, performance cannot be enforced, though the court may order restitution (Section 18 of the Remedies Law).
⚠️ In practice: the demand letter is usually where the extension is given and the record is built. We draft it so that, if the other side does not perform, a notice of cancellation can follow on solid ground - and so that nothing in it is later read as a waiver of your rights.
Which court, how long and what it costs
Clients abroad usually ask three practical questions before deciding whether to sue in Israel. Here are the answers, with the rules behind them.
Which court hears the claim
A money claim of up to NIS 2,500,000 on the day it is filed is heard by the Magistrates' Court (Section 51 of the Courts Law [Consolidated Version], 5744-1984). A larger claim goes to the District Court, and a private individual's claim of up to NIS 39,900 (2026) can go to the Small Claims Court. If the amount later grows through interest, linkage or costs, the court does not change. The claim is filed in Hebrew, and documents in other languages are usually filed with a translation. For the trial timetable and urgent relief, see commercial litigation in Israel.
How long it takes
Many disputes end within weeks, at the letter or in the negotiation that follows. A defended claim takes longer: Courts Administration data for 2024 puts an ordinary civil case at about 11 months on average in the Magistrates' Court and about 20 months in the District Court, and cases with experts or many witnesses take longer. We set out a timetable for your case at the start.
What it costs
The legal fee is set by the nature of the work and agreed in writing in advance, stage by stage: the letter and negotiation first, and a claim only if it is needed. There is no hourly meter. The court fee on a money claim is 2.5% of the amount claimed, paid in two halves: one on filing and one no later than 20 days before the first evidentiary hearing, so a case that settles early usually saves the second half (Regulation 6, Courts Regulations (Fees), 5767-2007). Any expert opinion is a separate cost. A court may order a plaintiff to deposit security for the defendant's costs (Regulation 157 of the Civil Procedure Regulations, 5779-2018); a plaintiff living abroad with no assets in Israel is a common reason, and we raise it with you before filing.
Interest, limitation and collection
A late money payment carries interest (Section 11(b) of the Remedies Law), and a court can award interest and linkage under the Adjudication of Interest and Linkage Law, 5721-1961. A judgment that is not paid is collected through the Execution Office.
Who Needs a Contract Dispute Lawyer in Israel
This page covers disputes decided in Israel, by the Israeli court or arbitrator that has jurisdiction. The court applies Israeli law unless the contract chose another law; a foreign governing law is proved by an expert opinion. Where the client sits changes how we work together, not the legal service.
Clients in Israel
Israeli companies and private individuals whose customer, supplier, contractor or partner did not perform. We meet at our Herzliya Pituach office or by video, explain every step in Hebrew or English, and take the claim to the court with jurisdiction.
Clients anywhere in the world
You are abroad; the other side, its assets or the work are in Israel. We run the dispute here, from the demand to the judgment, keep you updated in English at times that suit your time zone, and tell you at the start how to sign the power of attorney from where you are. If you already hold a foreign judgment, it can be enforced here under the Foreign Judgments Enforcement Law, 5718-1958; a foreign arbitral award, under the Arbitration Law, 5728-1968 and the New York Convention. If your contract is governed by a foreign law, that law is proved in court through an expert opinion on that law, and we work with the expert from the start.
Adv. Reut Eliyahu
Founder · LL.B & MBA · Licensed Notary · Registered Arbitrator · Israel Bar member since 2007
Adv. Reut Eliyahu heads Eliyahu & Co. Law Office in Herzliya Pituach and handles civil and commercial matters in Israeli courts. Every matter is handled by Adv. Eliyahu herself, from the first review to judgment. Her work spans civil litigation, commercial contracts, contract disputes and debt recovery.
In contract disputes she starts from the contract itself and the correspondence around it, because they usually decide both the remedy and the route. Her training as a registered arbitrator shapes how she presents a case: what the decision-maker needs to see, and in what order. The same practice drafts and reviews commercial agreements, so a dispute is handled with the contract's purpose in view. About the firm →
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Frequently Asked Questions
Common questions about breach of contract claims, legal remedies, and resolving contract disputes in Israel.
A breached contract? Let's look at your options.
An honest assessment, a clear plan and a fee agreed in writing in advance, under Israeli law.
Sun-Thu 08:00-19:00 · Fri 08:00-13:00 (Israel time) · Phone, Zoom or fully remoteFree Assessment of Your Contract Dispute
Describe what happened. We respond within one business day with a first assessment - for Israeli clients and international clients alike. No obligation.
4 HaOgen St.
Herzliya Pituach, Israel
Sun - Thu: 08:00 - 19:00
Fri: 08:00 - 13:00
The other side broke the contract. You don't have to handle it alone.
Demand letters, cancellation, court claims and enforcement in Israel, for clients in Israel and abroad - handled personally by Adv. Reut Eliyahu. Free first consultation, no obligation.
Israel office Sun-Thu 08:00-19:00 · Herzliya Pituach, by Zoom or fully remote · Fees agreed in writing in advance