Can I transfer my rights under an Israeli contract to someone else without the other side agreeing?

Israeli law treats the two halves of a contract very differently. Under Section 1(a) of the Assignment of Obligations Law 5729-1969 the right to be paid is yours to sell, and the person who owes the money has no veto unless the statute, the nature of the right, or the contract says otherwise. Under Section 6 the duty to perform is not yours to hand off, and passing it to a substitute requires the other party's agreement.

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Detailed Answer

The statute is short and unusually clear. Section 1 covers assignment of a right, including a conditional or future right, and dispenses with the debtor's consent as a default. Section 2 sets the price of that freedom: the assignment does not change the right or its terms, and the debtor keeps against the assignee every defence and counterclaim he had against the original creditor. A buyer of an Israeli receivable therefore inherits the dispute about the defective delivery along with the invoice. Section 4 resolves competing assignments in favour of the first in time, which is why a written and dated deed of assignment matters more here than the elegance of its drafting. Section 5 carries the securities across, so a guarantee or a pledge given to secure the original debt travels with it. And Section 6 draws the line at obligations, requiring the creditor's consent before a debtor can substitute someone else, with Section 7 confirming that the obligation itself is unchanged by the switch. The practical trap sits in Section 1's exceptions rather than in the rule. Israeli commercial contracts routinely contain a no-assignment clause, and a Hebrew clause saying rights may not be transferred without prior written consent is fully effective against you.

None of this requires anyone to be in Israel, which is the useful part for an overseas party, but three points of local practice decide whether an assignment actually works. Notice to the debtor is not a validity requirement, yet until the debtor knows, a payment made in good faith to the original creditor discharges the debt, so a foreign assignee who never notified the Israeli payer can find the money has gone to the wrong bank account entirely. Where the assignment is by way of security given by an Israeli company, registration at the Registrar of Companies within the statutory period is what makes the charge good against a liquidator, and a foreign lender who skips it is unsecured on the day it matters. And if the assigned right ends up litigated, the assignee sues in its own name in Israel, which drags a foreign assignee into Israeli jurisdiction, security for costs and Hebrew pleadings. Where the underlying contract also fixes the forum, that clause travels with the right, and we deal with the consequences in our answer on a Tel Aviv jurisdiction clause in a contract with an Israeli company.

In Practice: Under Section 1(a) of the Assignment of Obligations Law 5729-1969 a right is assignable without the debtor's consent unless restricted by law, by its nature, or by the contract, while Section 6 requires the creditor's consent to assign an obligation and Section 2 preserves the debtor's defences against the assignee. A charge by way of assignment granted by an Israeli company must be registered at the Registrar of Companies within 21 days of creation to bind a liquidator. Suing on an assigned Israeli receivable puts you in the Magistrates Court up to NIS 2,500,000 with a court fee of 2.5% of the sum claimed, half payable on filing.

When to Consult a Lawyer

• The Israeli contract contains a Hebrew no-assignment or consent clause, because assigning in the face of it can leave the assignee holding nothing and expose you to a damages claim from your counterparty
• You are taking an assignment as security rather than outright, since the registration deadline at the Registrar of Companies is short and a missed filing converts a secured position into an unsecured one
• The same receivable may already have been assigned to a bank or a factoring house, as Section 4 gives priority to the first assignment and the register will not always tell you it exists

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Speak With an Israeli Attorney

Assignments fail on details rather than on principle: an overlooked consent clause, a notice never given, a charge never registered. We check the contract, paper the assignment properly and make sure the Israeli debtor and the registers know about it.

Contact us for a confidential initial consultation.