As the government begins to allow many businesses to resume activity, and with growing calls to reopen private kindergartens and daycare centers, and in light of the many inquiries our office has received, we have chosen to share the information we have gathered with the wider public in order to assist you during this complex period.
Preliminary note — it is important to stress that the above information relates generally to the wider public and cannot be used to draw specific conclusions about your particular case. Every contract contains different clauses, some of which address situations in which the kindergarten was closed, force majeure, and so on. To provide a concrete legal opinion, you are welcome to contact our office.
A Facebook group was recently created to help parents who find themselves helpless in the face of the kindergarten. You are welcome to join the group.
Since the parents receive a standard contract, and no genuine negotiation actually takes place between the parties, it can arguably be determined that this is a standard-form contract — and we will now elaborate on this important point.
Standard-Form Contract
A further point that applies to all such contracts concerns standard-form contracts. A standard-form contract is a contract that has several characteristics:
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Absence of negotiation between the parties — parents usually receive an agreement and are required to sign it as-is, confirming the wording with their signature without any negotiation having taken place.
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A relationship of dependence — vis-à-vis the party providing the services. This is usually a kindergarten located near the parents’ home, or in the immediate vicinity, and the options available to the parents are relatively limited. In addition, kindergartens are often at full capacity, and out of a desire to secure a place, parents are forced to forgo negotiation lest the kindergarten refuse to admit them or view them as a nuisance — which could indirectly harm the child.
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A built-in imbalance in bargaining power — although the parents are supposed to be the “stronger party” in the contract because they are the customers, we witness a reversal of the balance of power: from the moment the parents register, they find themselves in a weak position vis-à-vis the kindergarten. Every parent knows that deciding to remove a child from the kindergarten due to dissatisfaction is no small matter, and that the harm the child may suffer as a result of a change in their environment can impair their ability to adapt and their sense of security in both the short and long term.
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The contract contains oppressive terms imposed by the stronger party — an oppressive term is a clause within the contract that creates inequality between the kindergarten and the parents, who are the weaker party. Oppressive terms usually restrict the parents’ right to cancel the contract and include unequal clauses. By way of illustration, we have compiled several examples for you:
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Exit penalties — a clause providing that the parents must pay the kindergarten a “penalty” if they decide to remove the child before the end of the year. The penalty amount ranges from one to several months’ fees, from NIS 2,500 to 7,000, depending on each kindergarten’s monthly cost;
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Payment for the month of August — even though the child does not attend the kindergarten during that month, parents are required to pay in full for August. The origin of this demand stems from a custom that has taken root over the years, whose source is unclear, but for lack of choice parents have been required to fall in line with this whim and pay for the kindergarten staff’s annual leave. For the avoidance of doubt, it should be noted that no employer–employee relationship exists between the kindergarten and the parents, and it is therefore unclear why a private kindergarten that receives money each and every month demands additional funds without any justification. If the parents want the child to attend the kindergarten in August, they must pay an additional sum, creating a double payment for a single month’s service.
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Unilateral termination of the engagement — in most, if not all, of the contracts, the kindergarten has the ability to terminate the engagement immediately, but the parents do not enjoy the same right, which demonstrates the inequality between the parties.
These are only a few examples, but they certainly constitute a representative sample. In all likelihood, had this been an agreement unrelated to kindergartens, we would certainly have expected the parties to balance the kindergarten’s rights against the parents’ obligations.
What Does Classifying a Contract as a Standard-Form Contract Mean?
If the contract is a standard-form contract, it can be “challenged” in court, and oppressive clauses can be given a different legal interpretation, or even struck down, even though the parents signed the agreement. The interpretation given to such oppressive clauses will be lenient toward the parents and will operate to the detriment of the stronger party. Moreover, if the kindergarten’s representatives failed to disclose the risks of the transaction when the contract was concluded, it may also be argued that the kindergarten breached its duty of disclosure.
In conclusion, a contract is not a statute and is usually subject to legal interpretation, so a signed contract should not be regarded as something that cannot be negotiated and/or as the final word.
Questions and Answers
1. Can the kindergarten teacher require parents to pay the kindergarten’s fixed expenses?
Many parents received a demand from the kindergarten to pay the rent expenses incurred by the kindergarten during the coronavirus pandemic. On its face, this is a rather puzzling demand, since the parents are not business partners in the kindergarten — neither in its revenues nor in its expenses — and there is therefore no reason for them to contribute to the kindergarten’s rent. If the parents wish to help the kindergarten weather the crisis and advance payments so as to provide the kindergarten with a kind of loan, as long as they are able to do so, they may do so — but as noted, this is not an obligation.
2. Are the parents entitled to a refund for the period during which the kindergarten was closed?
This question requires examining whether the contract addresses situations in which the service was suspended by the kindergarten as a result of various restrictions that meet the definition of force majeure or a pandemic. To the extent that the parties agreed between themselves that even in the event of a pandemic and a shutdown of the economy the payments would continue as usual, it can certainly be determined that the parties gave thought to the matter. However, as noted at the beginning of the article, this is a standard-form contract with an oppressive term — and this clause can therefore be voided.
3. Are the parents obligated to return the child to the kindergarten after the government lifts the restriction?
Many parents fear for their children’s health out of a genuine concern that they will be infected by other children, which would ultimately lead to the parents being infected as well. The parents’ concern may rise to the level of frustration of contract, as provided in Section 18 of the Contracts Law (General Part), 5733-1973, and the parents may be able to avoid payment to the kindergarten. It is important to note that there is no specific law on the matter, and the decision will in all likelihood have to come from the court — otherwise each party will interpret the contract in its own favor.
4. Can the kindergarten decide to grant a “credit” instead of a cash refund?
The kindergarten cannot decide on its own initiative to grant the parents a “credit” against a summer camp and/or another activity. If the parents do not wish to accept the kindergarten’s offer, they may demand their money back. It is recommended to do so with sensitivity and courtesy.
5. Can the kindergarten offset the days of March against the Passover holiday?
Some kindergartens decided on their own initiative that the days on which the kindergarten was closed in March would be offset against the Passover holiday, since, in the kindergarten’s view, this holiday is part of the kindergarten’s fixed vacation days. We believe that, in light of the fact that the kindergarten was closed and the contractual relationship between the parties was frozen during this period, there is no genuine reason to pay for the Passover holiday. By analogy to labor law, this is comparable to an employee placed on unpaid leave who is not entitled to payment from the employer for those days.
6. Can the kindergarten demand payment for the month of April?
Up to now, in April the kindergarten was closed and the contract was not performed for reasons unrelated to the parents and/or the kindergarten. We therefore believe there is no reason to pay for April, and it appears that there is consensus on this matter, accepted by both organizations and the courts.
The Ministry of Labor, Welfare and Social Services published on 22 March 2020 that “parents are not required to pay for a period in which no activity took place, and this will not prejudice their rights upon a return to routine activity.”
The Israel Consumer Council determined that “as a result of the government’s decision requiring kindergartens to cease their activities — that is, they are in a state of breach of contract due to frustration of contract — in this situation, parents cannot be required to fulfill their financial obligations and bear payments until the end of the school year.”
7. Is the kindergarten obligated to accept the child even though the parents refused to pay for the month of April?
As long as no cancellation notice terminating the agreement has been given, the contract remains in force. The kindergarten is therefore obligated to admit the child again the moment the government lifts the prohibition. But the law is one thing and reality is another, so if the kindergarten does not agree to admit the child and the contract has not been cancelled, you may sue the kindergarten for breach of contract for all the damages caused to you as a result of the termination of the engagement.
8. Can checks be cancelled?
If the monthly payment is made by check, you should demand the return of the checks in order to prevent a situation in which they are deposited in the future. Many believe that cancelling checks is a criminal offense, but this perception relates to delivering a check without cover with the intent not to honor it. Cancelling a check due to a failure of consideration may be a legitimate ground for cancellation.
9. How can parents’ payments be secured in the event that the kindergarten closes?
As long as the kindergarten does not provide guarantees for the parents’ money, there is no way to ensure the return of the payments if the kindergarten closes. We recommend obtaining a personal guarantee from the kindergarten’s owners, or from any other party the kindergarten agrees will guarantee the money, before you hand over any further payments.
10. Can the kindergarten require parents to pay for protective equipment intended for the staff?
The demand that parents bear an additional payment intended to protect the staff — which is not part of the agreed expenses the parents were required to pay when signing the contract — is not legitimate. Pursuant to Section 39 of the Contracts Law, contracts must be performed in good faith, and to the extent the kindergarten insists that the parents pay for protecting the staff, this demand may be refused.
11. Can the kindergarten demand an increase in the monthly fee?
This demand is unacceptable, and to the extent it contradicts the language of the contract it should not be agreed to, unless the parents have no objection. Increasing the monthly fee may give rise to a cause of action against the kindergarten for changing the terms of the agreement in a manner amounting to its breach.
12. If there is a medical concern regarding one of the parents, can I refrain from sending the child to the kindergarten?
This issue is not clear-cut, but it certainly gives rise to a good ground for not sending the child to the kindergarten.
13. We are not working and have no money to send the child to the kindergarten, and we want to cancel the contract — can we cancel it?
Financial hardship does not give rise to a right to cancel a contract. However, if the kindergarten insists on charging for the days on which it was closed and refuses to return the money to the parents, this action on the kindergarten’s part may be regarded as a ground for cancelling the contract.
14. Can the kindergarten force the parents to sign an additional addendum to the contract that discriminates against their rights?
A demand by the kindergarten providing that the parents will be required to make the monthly payments if the coronavirus returns may be interpreted as a lack of good faith in performing the contract, and the parents are not obligated to agree to this demand. It is entirely possible that even if the parents sign this addendum, it could be voided in court.
15. Can the kindergarten discriminate against children who did not register in advance for the coming year?
Certainly not. Discrimination on this basis is prohibited, and the kindergarten has no right to favor children who registered in advance for another year at the expense of those who have not.
16. Can the kindergarten have parents sign a document releasing the kindergarten from liability if the child contracts coronavirus?
The determination of whether the kindergarten is liable in tort for one of the children contracting the coronavirus will have to be examined in accordance with tort law, and this document will not bar the parents from suing the kindergarten to the extent the kindergarten acted negligently and contrary to government guidelines.
17. Can parents sue a kindergarten that closed down for breach of contract?
Possibly. But in any legal proceeding, before filing a claim, we assess the chances of success and whether it will be possible to collect from the defendant — that is, whether the opposing party will be able to pay the judgment if the claim is accepted. It is therefore reasonable to assume that the financial situation of a kindergarten that has shut its doors is not sound, and so before spending additional money on a legal proceeding, one must weigh how worthwhile the claim is. Reward versus risk.
18. If the current kindergarten moves to a new location, are the parents obligated to send the child to the kindergarten?
A contract concluded between the parties applies only to those agreements. To the extent there is a change of circumstances that harms the parents (distance, etc.), the parents are not obligated to agree to move to the kindergarten’s new location. However, it must be examined whether the information about the relocation of the kindergarten was known to the parents in advance and whether the parties agreed to it.
19. Must the parents pay cancellation fees if they are unwilling to send the child to the kindergarten?
Cancellation fees and/or penalties for early exit from the contract should be paid if the parents breached the agreement. The restriction imposed on the number of children in a kindergarten prevents the kindergarten from placing more than 17 children in a single room — but this restriction was imposed not on the parents but on the kindergarten alone. We therefore believe that parents who wish to cancel the contract on the grounds that they are unwilling to accept the arrangement that has formed will not be charged cancellation fees. It should be noted, however, that this can be qualified, since it is reasonable to assume that cancelling the entire contract by the parents could be perceived as a lack of good faith in performing the contract, given that the trigger was pulled too readily and the parents did not exhaust all the possibilities for performing the contract.
20. Can the kindergarten demand an increase in the monthly payment amount?
The kindergarten is not entitled to demand that the parents increase the monthly payment, and to the extent this demand is not anchored in the contract it has no legal basis whatsoever.
Our office accompanies groups of parents in private kindergartens and daycare centers and provides legal support with the aim of regulating the system of contracts between the kindergarten and the parents, in order to prevent unpleasantness and to avoid needless harm to parents, who are the weaker party in the contract.
If you have a question that was not addressed in this article, you are welcome to contact us through our website.
