Failure to Deliver Goods: On Contract Cancellation and Compensation

3. Non-Delivery of a Product in a Peddling Transaction

A peddling transaction occurs when a vendor offers a transaction without a consumer’s prior request, anywhere other than the vendor’s business premises or those of their representatives. This includes situations where the vendor visits the consumer’s residence, military base, workplace, or school, or nearby locations. For example: if a vendor holds a sales fair at a military base, and the consumer makes a purchase there, this is a peddling transaction. Because the consumer did not invite them and the transaction took place near the consumer.

First, the consumer must check that the product is not of a type that does not allow cancellation in peddling transactions due to non-delivery.

Then, follow the rules for cancelling a transaction due to non-delivery of a product ordered in a peddling transaction:

• The transaction can be cancelled due to non-delivery within 14 days of the date the product was supposed to be delivered (Section 14(a)(1) of the Consumer Protection Law, 1981); Specific populations have a longer timeframe;
• If the product was delivered late, the consumer will return it to the vendor at the delivery location;
• Within 14 days of receiving the cancellation notice, the vendor must return the portion of the transaction paid by the consumer. The vendor may deduct cancellation fees;

If a vendor fails to return the portion of the transaction paid by the consumer, compensation without proof of damage can be claimed.

Cancelling Distance Selling or Peddling Transactions Due to Non-Delivery – Specific Populations:

In 2016, Amendment 47 to the Consumer Protection Law introduced concessions for specific populations (people with disabilities, new immigrants, and senior citizens). These populations are generally entitled to cancel distance selling or peddling transactions within four months from the latest of the following three dates:

1. The date of the transaction;
2. The date of receipt of the product (or, in case of non-delivery, the expected delivery date);
3. The date of receipt of the “good faith disclosure” document.

Provided that the transaction involved a conversation between the vendor and the consumer, including electronic communication. The vendor may request documentation proving the consumer’s membership in the specific population. For example: disability certificate, new immigrant certificate, or senior citizen certificate. However, the vendor may not request additional proof beyond the aforementioned certificate.

The right of cancellation for specific populations provides them with a longer timeframe for cancellation. However, the other rules of cancellation remain unchanged – both in peddling transactions and distance selling transactions.

Vendor’s Obligation to Return Paid Consideration

The vendor must return the consideration paid at the time of the cancellation notice, and at the latest within 7 business days. The consideration must be returned in the same manner as the payment was made (Regulation 4 of the Consumer Protection (Cancellation of Transaction) Regulations, 2010). As follows:

• If in cash: Cash or cashier’s check
• If by check: The return method depends on whether the consumer’s check was cashed:
  • If cashed: Return by check or cashier’s check with a due date up to 5 business days (at most);
  • If not cashed: Return by check or cashier’s check with a due date up to 5 business days after the check is actually cashed;
• If by credit: The return method depends on whether the vendor is credited by the credit card company:
  • If not yet credited: The vendor will cancel the credit card transaction;
  • If credited: The vendor will return the amount received from the credit card company in cash or by cashier’s check; or – the vendor will notify the credit card company to cancel the transaction, and the company will directly credit the consumer, provided it can recover the amount from the vendor due to the transaction cancellation.

If the vendor violates the return of consideration provisions, compensation without proof of damage can be claimed.

How to Provide a Cancellation Notice for Non-Delivery of a Product?

There are two cancellation notice options: immediate cancellation or cancellation after a warning. How do we know which notice is appropriate? We must determine the type of breach – whether it is a “regular” or a “fundamental” breach:

“Regular” breach

An act or omission that violates the purchase agreement (Section 1(a) of the Contracts (Remedies for Breach of Contract) Law, 1970).

Breach of Contract: Consumer Actions

If a breach occurs, allow the vendor to fix it. Warn them: rectify the issue timely. Otherwise, the contract will cancel.

Vendor Rectification: Agreement Cancellation

If the vendor fails to fix the breach, or no agreement is reached, the consumer can cancel.

Fundamental breach

One of two: (1) A breach stipulated in the agreement as fundamental; or (if the agreement is silent on this matter) – (2) A breach that a reasonable person would not have entered into the contract had they foreseen the breach and its consequences (Section 6 of the Contracts (Remedies for Breach of Contract) Law, 1970).

Fundamental Breach: What Qualifies?

Delayed clothing order for children? Likely not a fundamental breach.

Security Uniforms: A Fundamental Breach Example

No uniforms for a security company? They cannot operate properly. This is a fundamental breach.

In a fundamental breach, the consumer may cancel the contract without prior warning (Section 7 of the Contracts (Remedies for Breach of Contract) Law, 1970). That is, the consumer does not need to give the vendor time to rectify the wrong before cancelling the contract. They may immediately notify the vendor that the contract is cancelled and demand the desired remedy.

Note! The final cancellation notice must be provided within the timeframe stipulated in the law and regulations, according to the type of transaction being cancelled.

Compensation Without Proof of Damage for Non-Delivery of a Product

Vendor Compensation: Claiming Without Proof

Compensation from vendors varies by transaction. This section covers compensation without proof of damage.

Non-Delivery Compensation: Specific Amounts

For other compensation claims, these rules don’t apply. Here are amounts for non-delivery compensation without proof:

Product Purchased On-Premises: Compensation for Non-Delivery

For in-store purchases, claim compensation without damage proof. This equals price paid minus value on cancellation day. (Contracts Law, 1970, Section 11(a)).

Additional Compensation: Misleading Delivery

Also, claim compensation for misleading delivery location. And for failure to deliver there. (Consumer Protection Law, Section 31(a)(1a)).

Distance/Peddling Transactions: Special Compensation

For distance or peddling transactions, claim compensation. This covers violating refund rules or wrongful cancellation fees. (Consumer Protection Law, Sections 31(a)(3)-(4)). This can be up to 10,000 NIS. In certain cases, up to 50,000 NIS. (Consumer Protection Law, Section 31(a)(c)).