What is an Agreed Compensation?
Israeli law allows sellers to predetermine breach of contract compensation in the contract. Agreed Compensation is usually set at 15% of the value of the property that you are buying, though some people agree to a greater or lesser percentage. You must be careful how this clause is written. It should be specified that Agreed Compensation does not detract from your collecting on other damages you may incur. Furthermore, you should leave yourself the option of canceling the contract and receiving the Agreed Compensation or alternatively, fulfilling the contract but still collecting the Agreed Compensation, as described above. The courts rule by these contractual terms most of the time, so the Agreed Compensation clause and the level of compensation should be carefully determined by the parties. This is particularly true if there is a real risk that you may be the one to be in breach of contract – for example, if you are selling another apartment to finance the new one. You may find that
