The tort of causing breach of contract
- This approach finds expression not only in relation to the tort of negligence, but also in relation to other torts in which a breach of contract was caused. Thus, "the position of the case law is that when a manager acts within the framework of his authority and incidentally causes the company to breach a contract with a third party, as long as the manager's action was for the benefit of the company, his actions should be treated as the company's actions only. In order for the manager to be held liable for causing a breach of contract, it must be proven that the manager exceeded his authority, or acted contrary to the company's interest or an extraneous motive" (Goshen and Eckstein, at p. 203).
Thus, for example, it was held in the Shatil case, in paragraph 28:
Even if the appellants had proved that it was respondents 1-3 who caused the corporation to breach the contract with them, there is no argument in our case that respondents 1-3 or any of them exceeded their authority, or acted contrary to the benefit of the company or for any foreign motive. In this situation, they cannot be held liable for causing a breach of contract between the company and the appellants [emphasis added].
- Thus, even with respect to the tort of causing breach of contract, the law reflects a balance between the conflicting purposes in allowing a third party to sue the officer personally for this tort. The direct and obvious rivalry of the third party with respect to the tort is against the company itself. Insofar as he wishes to establish a direct rivalry with the officers, and to impose personal responsibility on them, he will have to establish the appropriate circumstances that can justify it, and allow him legal standing to direct his claims against them directly.
- And once we have been equipped with normative insights, we will turn to applying them to the case at hand.
Examining the case before us - preliminary components that will stand in the background of the analysis
- The time has come to examine the question of the personal liability of the directors and of Mr. Nehemiah, and whether there are circumstances that give them legal standing to sue and direct legal competition against them. But before we dive into the depth of the controversies on the agenda, I found it necessary to address some preliminary issues that will help in understanding and focusing on it.
ADN's agreement with Mr. Knepler reflected a deal under pressure, in which decisions had to be made very quickly
- The parties entered into an agreement against the background of ADN's control of the properties in France. I accept the defendants' position that there was a transaction on the agenda that was formulated under conditions of pressure, and considerable pressure. The company's reports reflected a real danger to its future. Given the extent of its debts and the state of its liquid assets, it was clear that it was unable to repay its current obligations, and that it was approaching insolvency.
Mr. Knepfler also testified that Adv. Pereg, who was one of those who presented him with the transaction, told him about "ADN's approach to insolvency by leaps and bounds" (paragraph 18 of his affidavit). When the transaction was first examined by the Tamir Fishman Foundation, Mr. Tal Levy noted on its behalf that since the company was in insolvency, collateral should be received in addition (P/1; at p. 5 of the minutes).
- And now, it was the company's dire financial situation that presented an opportunity. In a situation where a company with assets is desperate for liquid funds, it is possible for third parties to purchase some of its assets at relatively low prices, taking into account its financial situation.
In this regard, the testimony of Adv. Pereg, who described in his affidavit the background to the conclusion of the agreement between Mr. Knepler and the company, is reliable, because it is consistent with the relevant economic data, and with the reality of the matter as it stands.