Deputy A-G sides with customers over party halls in COVID-19 disputes

It would be illegal for most party halls to deposit or use checks that customers gave them as a down payment for celebrations that were canceled due to the coronavirus crisis, a senior legal official said Monday. Deputy Attorney-General for Civil Legislative Affairs Erez Kaminitz's statement said he was responding following many inquiries from customers about their rights regarding the issue. Kaminitz said that ideally the customers and the party halls should agree to new dates to hold the planned celebrations, in which case the down payment checks could be used as is customary. However, if the coronavirus crisis made holding the celebration in the originally planned hall impossible, then, absent some kind of extraordinary contractual provision, the party halls could not use the down payment checks as leverage in negotiations and must return them. Kaminitz said this was the proper reading of the law since customers could not be held accountable for the unexpected impact of a world-changing event like the COVID-19 pandemic. The party halls association attacked Kaminitz's announcement, saying he showed no understanding of the economic realities that they are coping with and that his decision could bankrupt the industry. It was unclear if the party halls would follow his guidance or hope that they can find a court that would view the issue differently than Kaminitz. In April, the Justice Ministry announced that it had established an intergovernmental committee to evaluate what impact the current coronavirus situation could and should have on complying with contracts from a system-wide perspective. The presumption even then was that the unique coronavirus situation may lead to an unprecedented number of contracts being violated and delayed. In turn, this could lead to an unparalleled number of lawsuits, which could overwhelm a judicial system that itself is barely operating at present. The aspiration of the committee was to find a system-wide solution to the issue that will balance the various public interests at stake so as to avoid chaos and uneven outcomes for different parties, based on a situation that was beyond their control. There was also particular concern about contracts and leases relating to living spaces and business premises. The new committee was slated to find solutions that would avoid mass evictions of individuals or businesses, which could further traumatize the public and delay a broader countrywide recovery. Traditionally, in law there is a category called “force majeure” or an act of God, such as major natural disasters like earthquakes or hurricanes. If such a natural disaster occurs and makes it impossible for someone to fulfill their obligations under a contract, that party can receive an exemption from complying with the contact. But even those situations deal with individual contract problems and do not necessarily look at issues of an entire society all at once, as the new committee was expected to do. Kaminitz's announcement was one of a series that the government has made dealing with different aspects of the contractual and economic consequences of the coronavirus crisis.

Deputy A-G sides with customers over party halls in COVID-19 disputes

The party halls association attacked Kaminitz’s announcement, saying he showed no understanding of the economic realities that they are coping with and that his decision could bankrupt the industry.

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