The Standard Contracts Law: the sections discussed on the site

Because an unfair term in a standard-form contract may be voided after the fact, reviewing an agreement before signing pays off for both sides: for the drafter, so that the term will stand, and for the customer, to know what can be challenged.

What the law provides

Section 2 of the Law defines a “standard-form contract” as a contract in which all or some of the terms were set in advance by one party (the one who drafts the contract and offers it) to serve as a template for many contracts between it and many people who do not determine their content, for example a website’s terms of use, a standard insurance policy or a subscription contract for a service. Section 3 empowers the court and the Standard Contracts Tribunal, established under the Law, to void or change a term in a standard-form contract that, taking into account all the terms of the contract and the circumstances, is unfair to customers or gives the supplier an unfair advantage that is likely to lead to unfairness to customers: an “unfair term”, in the words of the Law.

Section 4 makes it easier for a customer who wants to challenge an unfair term: it sets a list of terms that create a “presumption” that the term is unfair, so that the burden of proof shifts to the supplier to show that the term is not unfair after all. Among the presumed terms: a full or partial exemption of the supplier from liability that applies to it by law, or an unreasonable limitation of its contractual liability; giving the supplier a right to change a central term of the contract (such as the price) at its own discretion; restricting the customer’s freedom to contract with others; and shifting a burden of proof to the customer. Section 5, by contrast, sets terms that are void from the outset without any need for a judicial decision, among them a term that prevents or limits the customer’s right to litigate in court.

A numerical example

A subscription company publishes terms of use stating that the company “may change the subscription price at any time, at its sole discretion, without advance notice”, and a term stating that “any dispute will be decided in arbitration before an arbitrator chosen by the company, and not in court”. The first term is one of the terms presumed to be unfair under section 4 (a right to change the price unilaterally), so the company must show that it is not unfair after all. The second term, referring every dispute to arbitration before an arbitrator the company chooses, is one of the presumptions of unfairness in sections 4(8) and 4(10), so for it too the company must show that it is not unfair; section 5 voids from the outset a term that denies or limits the customer’s right to go to court, and a term that exempts the supplier from liability for bodily injury or for a malicious act.

For practical guides on limitation of liability in a contract and on website terms of use, see Limitation of liability in a contract: what works, what does not — and how not to get it wrong and Website terms of use: what they must include, and the page Contracts and commercial agreements.

The sections the site discusses

This page brings together 4 sections of the Standard Contracts Law that are discussed in 3 guides on this site. The title of each section is the marginal note of the consolidated version of the Law (unofficial translation), not a heading we wrote. The last column links to the guides on this site that discuss that section.

The original text of the law

• Standard Contracts Law, 5743-1982: text of the Law
• Standard Contracts Law: consolidated version on Nevo (Israeli legal database)

FAQ

What is a “standard-form contract” under the law?
A contract whose terms were set in advance by one party to be used again and again in dealings with many customers who have no influence on its content, for example a website’s terms of use or a standard insurance policy (section 2).

Which terms are presumed to be unfair?
Among others, a term that exempts the supplier from liability, gives it a right to change a central term such as the price at its own discretion, or restricts the customer’s freedom to contract with others (section 4).

Is a term that denies the customer the right to go to court valid?
No. Such a term is void from the outset under section 5, without the customer having to prove that it is unfair.

What happens when a term in a standard-form contract is found to be unfair?
In a proceeding between a supplier and a customer, a court that finds a term unfair will void it in the contract between them or change it to the extent needed to remove the unfairness (section 19). In addition, the Attorney General, the Commissioner for Consumer Protection and Fair Trade, and customer organizations and public authorities designated or approved for this purpose may ask the Standard Contracts Tribunal to void or change an unfair term (section 16). Voiding or changing by the Tribunal applies, as a rule, to every contract made under that standard-form contract, even if it was made before the decision, but not to obligations performed before it (section 18).

This page collects the references to legislation on the site. The section headings are the marginal notes as worded in the consolidated text of the law, and are not our interpretation. The binding text is the one published in Sefer HaHukim (the official gazette of statutes). The content here is general information and is not legal advice. Translated: 12 November 2026 · Hebrew version updated: 13 October 2026.