Your Israeli buyer wants the next shipment released. The previous invoice is still unpaid, its finance team is asking for another extension, and your sales director says stopping delivery will destroy the relationship. Shipping anyway turns a credit warning into a larger exposure. Stopping on the wrong legal basis can turn you into the party facing a claim for breach.
When an Israeli buyer’s credit deteriorates before shipment, the legal response must protect both the goods and your contractual position. Our firm represents foreign suppliers in substantial commercial disputes with Israeli counterparties. We connect the evidence of payment risk, the right to suspend performance, the security offered and the route to collection or litigation.
The dangerous moment is not always the first missed payment. It is the next shipment that leaves after everyone has seen the warning signs.
Start with the obligation you are about to perform
A sales manager’s instruction to “put the account on hold” is not a legal strategy. The first question is what the supplier must do next: finish production, deliver to a carrier, release shipping documents or hand goods to the buyer. Those acts can happen in different countries and under different contracts.
The review starts with the signed agreement, accepted purchase orders, credit terms, delivery provisions and amendments. Identify which legal entity owes the price, which entity placed the order and whether the party asking for release has authority to agree to security. A solvent affiliate’s reassuring email is not the same thing as its enforceable payment obligation.
Separate the overdue debt from the next delivery. A payment default under one transaction does not automatically answer whether performance under another transaction can stop. Equally, a shipment that is not yet due can become the point at which a supplier prevents a much larger loss.
When the CISG allows suspension for deteriorating credit
Cross-border sales of goods involving an Israeli business require a deliberate review of the United Nations Convention on Contracts for the International Sale of Goods, commonly called the CISG. Israel is a contracting state. Section 3 of Israel’s Sale (International Sale of Goods) Law also extends the Convention’s application to contracts involving a party whose place of business is in a non-contracting state. Counsel must establish whether the Convention applies to the transaction and whether the parties excluded or changed its operation. The governing-law clause must be read together with the Convention’s application rules, rather than treated as the end of the analysis.
Article 71 addresses a specific danger: after the contract is concluded, it becomes apparent that the other party will not perform a substantial part of its obligations because of a serious deficiency in its ability to perform or creditworthiness, or because of its conduct in preparing to perform or performing the contract.
That is a legal threshold, not a general permission to stop supplying whenever a customer becomes difficult. A documented sequence of broken payment commitments, a substantial unpaid balance and concrete evidence of financial deterioration require a different analysis from a market rumour or a single administrative delay. Our firm builds the evidential basis before the suspension notice is sent, so the supplier’s position does not depend on explanations invented after the dispute begins.
Suspension requires notice, and assurance changes the position
Under Article 71(3), the party suspending performance must immediately notify the other party. It must continue performance if the other party provides adequate assurance of performance. A supplier therefore needs more than a notice saying “no further deliveries until further notice”. The notice must fit the contractual obligation being suspended, the facts supporting the decision and the response sought.
In our experience, a commercial team can weaken a strong position by mixing an overdue-debt demand, a suspension notice and a termination threat in the same informal exchange. Our firm separates those steps and manages the communications so the legal position supports the commercial objective.
We assess an offer of assurance by what it actually secures. A payment promise, a parent-company guarantee, a bank instrument and cash against agreed release conditions do not provide the same protection. The review covers the amount, the beneficiary, the issuing party’s authority, expiry, conditions for a claim and the place where enforcement would occur. A document bearing the word “guarantee” can still leave the shipment exposed.
The goods have already left. Can delivery still be stopped?
Article 71(2) deals with goods dispatched before the grounds for suspension become evident. It allows the seller to prevent handing the goods over to the buyer even where the buyer holds a document entitling it to obtain them. The provision expressly concerns rights in the goods as between seller and buyer.
This distinction matters in practice. The seller’s rights against the buyer and the carrier’s obligations are separate questions. A freight forwarder cannot be expected to solve a legal dispute from a rushed email. Counsel must review the transport documents, who controls release, where the goods are and what instructions the relevant parties can lawfully implement.
Delay creates additional losses: storage, demurrage, insurance issues, deterioration and resale costs. The response should assign responsibility for preservation and costs while keeping a clear record of the goods and the steps taken. A supplier trying to protect an unpaid shipment should not create a second dispute through unauthorised interference with delivery.
Do not confuse suspension with terminating the contract
Suspension preserves a position while the credit risk is addressed. Avoidance of the contract is a different step. Under Article 72, before performance is due, it must be clear that the other party will commit a fundamental breach. If time allows, reasonable notice must be given to permit adequate assurance; that advance-notice requirement does not apply where the other party has declared that it will not perform its obligations. The declaration of avoidance itself still requires notice to the other party under Article 26.
The distinction determines what our firm advises the supplier to do with unfinished production, goods in storage and replacement customers. Declaring the relationship over too early can jeopardise recovery. Continuing to incur avoidable costs after the danger becomes clear can also damage the financial outcome. We map the legal options against the shipment timetable before either decision is announced.
Instalment contracts add another layer. Article 73 distinguishes avoidance relating to a particular instalment from avoidance of future deliveries. A failure affecting one delivery and grounds to conclude that a fundamental breach will affect future instalments must be analysed under the relevant provisions, not collapsed into an automatic cancellation of every order. Article 73(2) also requires avoidance of future instalments to be declared within a reasonable time.
If Israeli insolvency proceedings have begun, our firm first checks the opening order, the company’s operating status and the rules governing existing contracts and essential supply. A court-supervised business rescue changes the legal setting for stopping deliveries and negotiating payment. The response must protect the supplier within that setting, rather than send a routine credit-hold instruction that ignores the proceedings.
Use a secured release agreement to control the next step
A negotiated release can preserve a valuable trading relationship without repeating the original exposure. Our firm structures the arrangement around identifiable goods, an agreed payment or security mechanism and precise release conditions. We address whether payments settle old invoices, fund the new shipment or serve another agreed purpose, so the allocation does not become the next argument.
The agreement should also deal with existing claims, admissions, disputed amounts and what happens if the buyer fails again. An extension that accidentally releases a guarantor or compromises an existing debt can cost far more than the additional credit period appears to be worth. Before accepting a revised arrangement, we test both its commercial value and its enforceability against the parties expected to pay.
Protect the collection position before the exposure grows
If the buyer cannot provide a workable solution, the next step is not simply a stronger reminder. Our firm examines the evidence for the debt, available security, dispute-resolution terms and the Israeli enforcement strategy. We assess urgent legal measures where the facts support them and prepare the claim while preserving negotiations that can still produce payment.
Bring the agreement, order history, unpaid invoices, payment correspondence and current shipment documents. These let us identify the immediate decision: whether to release, suspend, demand adequate assurance or take the dispute into proceedings. Do not wait for another container to leave before that decision is made.
Your Israeli buyer is asking for more goods while its payment position is deteriorating? Contact our firm before increasing the exposure. We handle the contractual response, negotiations over security and release, and legal proceedings to protect the value at stake.
This article is for general information only and does not constitute legal advice. Laws and their application depend on the facts and jurisdiction and may change. Although we aim to keep this information accurate and current, we do not guarantee that it is complete or up to date. The article may contain omissions or errors. Reading this article does not create an attorney-client relationship with RNC Group. Before making a decision or taking action, seek advice from a qualified lawyer in the relevant jurisdiction.