Subsequently, Section 8.3 lists three options, in sub-provisions 8.3.1 to 8.3.3.
- The notice of immediate cancellation refers to clause 8.3 of the agreement in general, without reference to a concrete alternative, but it appears that the relevant for our matter is the one set out in clause 8.3.3 (Other sub-provisions deal with In the event that a trustee is appointed to Danan in bankruptcy, a liquidator or Receiver, in the event that a substantial part of its assets has been foreclosed, and so on).
The alternative in clause 8.3.3 of the agreement describes the following case:
"If it turns out that a material statement of [Danan] as stated in this Agreement is incorrect and/or accurate and/or if [Danan] and/or anyone on his behalf violates a fundamental provision of this Agreement and/or any other provision that will not be amended within 14 days from the date [Lehavot] approaches [Danan] demanding an amendment."
- The notice of immediate cancellation is seen in its conduct described there since the announcement of the termination of the agreement, such as in the matter of laying off employees, closing a department and raising the price for customers, Because Moves that are contrary to the obligation under clause 4.1 of the Agreement (that it will have all the resources, skilled manpower, sufficient number of employees and the means required for the provision of the services throughout the period of the Agreement); to undertake in accordance with clause 4.14.1 of the Agreement (to increase the manpower and all means at its disposal); to undertake in accordance with clause 4.14 of the Agreement (to do as much as possible to expand the circle of customers); and an undertaking under clause 11.7 of the agreement (a mutual undertaking not to take an action that may be harmful to the good name or business of the other party) (M/115, clauses 4-6).
Later on, it will be clarified that there is a reason for the claim that the conduct in question after receiving the notice of termination of the agreement breached contractual obligations (even if not all of the alleged provisions). However, despite the aforesaid, there is a difficulty in the cancellation notice. I will clarify.
- Article 8.3.3 refers to a case of a fundamental breach of a provision of the Agreement or a case of in which another provision of the agreement is violated and is not amended within 14 days from the date of Lahavot's demand for an amendment.
The agreement between the parties establishes with respect to a number of provisions, that their breach will constitute a fundamental breach of the agreement (and in the absence of any other argument, it should be said that this refers to a fundamental breach of a provision). This was determined, for example, in the matter of Clauses 2.17-2.16, 4.3, 4.10, 4.13, 4.14.9-4.14.7, 4.17-4.15, 5.5, 6.7 of the Agreement.
- The clauses of the agreement to which the notice of immediate cancellation refers are not clauses whose breach has been determined to constitute a fundamental breach. Therefore, according to clause 8.3.3 of the Agreement, the possibility of relying on a breach of these provisions for the purpose of immediate cancellation is contingent on the fact that a demand was made to correct the breach and it was not corrected within 14 days. However, Lehavot did not immediately refer to the cancellation notice and did not attach to the material such a demand letter that was sent immediately prior to the cancellation notice.
Once a notice of cancellation is sent immediately without meeting the prerequisites set forth in the agreement, the giving of the notice is inconsistent with the law.
- In its summaries, Lehavot argues that it has already arisen the right to immediately cancel the agreement, in light of fundamental breaches of the agreement by Danan (paragraph 21 of the summaries). There is no need to go into the details of the question of whether fundamental breaches of the agreement were indeed committed even earlier, in a manner that could have granted the right to terminate the agreement immediately, in practice, this was not the reason for the immediate cancellation notice. Lehavot itself, even if it believed that it had the right to do so, chose in July 2017 to terminate the agreement with advance notice; When it announced immediate cancellation in September 2017, it did so on the basis of certain grounds (and to the question of whether a party to a contract announcing its cancellation may rely on a cause that did not appear in the cancellation notice, see, for example, Civil Appeal 8398/17 Theophilos Giannopoulos, Patriarch of the Greek Orthodox Church of Jerusalem v. Berisford Investments Limited (June 10, 2019), section 24; Civil Appeal 2232/12 The Latin Patriarchate of Jerusalem v. Farwaji (May 11, 2014), para. 13).
- Towards the end of this chapter, and although this does not change the above conclusion regarding the notice of immediate cancellation, the picture that emerged from the evidence regarding the conduct in question after the notice of termination of the agreement in July (and prior to the notice of cancellation in September will be noted).
- The main issue that led to the cancellation notice was the reduction of the number of employees and conduct that to a large extent reflected the actual termination of the agreement. The evidence indicates that shortly after the notice of termination of the agreement, Danan began proceedings towards the dismissal of the relevant employees. The termination notice was given on Thursday, July 20, 2017, and many summons to the hearing were issued as early as Sunday, July 24, 2017 (M/126). Some of the employees in question were also sent a notice of dismissal in August and the beginning of September, prior to the notice of cancellation (M/126). "When we understand [..] [that] the contract as far as they are concerned [...] ends. We are holding a hearing" (Navot, p. 267, paras. 6-12; and Sha'abo, pp. 297, paras. 22-24; Shai, p. 56, paras. 12-13). "The next day, employees of Danan called our service center, and said that they had begun hearing and dismissal processes there" (Shai, pp. 56, paras. 7-8). Some of the employees were diverted to other jobs. "Q: As early as July '17, they came to you and gave you a different job, they said, 'Go in peace,' the story with 'Flames' is over. You nod and say. A: Yes" (Sha'abo, p. 297, paras. 14-24).
- Danan's argument that in practice employees were not dismissed prior to receiving the notice of cancellation immediately, and that Notice Cancellation by Lehavot Relied on Rumors (paragraphs 19-21 of the summaries of the case; paragraph 5 of the summaries of the reply) do not fit well with the evidentiary basis. The Evidence Nor do they support the statement in testimony regarding the period after the July termination notice, Because Ronen He tried to save and prevent the evil of the decree (p. 234, s. 28 - p. 235, s. 4; p. 235, s. 14-18; p. 236, s. 1-13). The witness was unable to reconcile the matter (p. 236, s. 22 - p. 237, s. 7; preventive actions to which the respondent refers constitute an activity intended to Prevent expenses as opposed to activities Designed for to save the agreement).
- It can be understood that those who are about to terminate a contract want to reduce their costs. At this stage, the message was also conveyed that Danan (Ronen) was not interested in an updated engagement in the format discussed by the parties in the weeks preceding the termination notice (pp. 56, 25 - p. 57, 2). However, such a desire, however understandable, does not exempt from fulfilling the obligations under the agreement as long as it is valid, and it must be acted in a manner that allows for this.
According to the testimonies, this was not the case in our case. "In practice, [Danan] greatly reduced or zeroed their activity with 'Flames' immediately" (Shai, pp. 56, 12-13). "Danan's team is gone, it's their decision. We did not receive the 180-day criminal appeal of the agreement" (Yossi, pp. 30, 5-6). "They didn't wait for 180 days. They folded and closed everything. The service system, they returned equipment to us, they broke the tools" (Gilo, p. 189, s. 14). There is reason to argue that the move was carried out in a manner that would have harmed the provision of services many months before the expected date of termination of the contract. "The 180 days that Danan should have continued to work as usual were harmed in a much, much more substantial way [...] We had to stop the bleeding, it was terrible. Simply terrible" (Yossi, pp. 29, 28 - pp. 30, 4).