The Positions in the Pleadings - Summary
Danan's position
- Danan claims that after years in which she provided Lehavot with service on an occasional basis, Lehavot approached her in 2015 with an offer to enter into a distribution and service agreement for products in the field of hoods and buses, in light of the ongoing decline in Lehavot's sales due to poor service.
After the agreement was signed and in order to establish a long-term relationship, Danan allegedly made substantial investments in infrastructure that would enable it to provide the services. In addition, a dedicated department was established, resources were allocated for the activity, vehicles, equipment were purchased and even a compound was purchased that will allow comfortable and safe entry and exit for buses in which fire extinguishing systems will be installed.
Danan further claims that against the background of the long-term vision and in order to establish its position with Lehavot, it priced product installations at a relatively low price, with the expectation that it would be profitable at the stage when service would be provided to the installed systems. The intention, which was known to both parties, was to absorb damages in the first stage, in order to enjoy the benefits inherent in the second stage, in which Danan would be granted exclusivity.
- Danan goes on to claim that as the date of the end of the first stage approached, it became clear to her astonishment that Lehavot was not in a hurry to transfer all the customers to it and even transferred works that were supposed to be given exclusively to other distributors that compete with Danan. It also became clear that Lehavot does not transfer the bus sector to Dan. Loaded Because at this point, Danan had already invested a lot of money and had to "swallow the bitter pill" regarding buses, in the hope that the transition to exclusive distribution would materialize and reward her. The problem is that Lehavot continued to violate the agreements, worked with other distributors and even sold the products to them at a lower price than when it sold them to Danan, and resulted in Danan's prices being relatively high and unattractive to customers. In addition, Lehavot did not provide Danan with sufficient spare parts and stocks and almost paralyzed her work.
According to Danan, it itself continued to fulfill its obligations under the agreement, increased Lahavot's customer circle, and at the same time lost jobs every month to a considerable extent in light of Lahavot's violations. In the end, Danan Lahavot warned Lehavot about the violations and then Lehavot announced the termination of the agreement. Danan was forced to begin hearing proceedings for the employees who were hired for the purpose of fulfilling the agreement, and then Lehavot announced its immediate cancellation.
- Danan claimed that Lehavot had grossly breached the agreement and is petitioning for compensation as a result. The statement of claim also mentions grounds for lack of good faith in the fulfillment of an agreement, and caused a breach of an agreement between Danan and its customers regarding the supply of spare parts and inventory.
From the financial aspect, the arguments in question relate to the investments made as part of the assessments of the existence of the agreement, losses from the product installation activity and the loss of revenue and the resulting loss of gross profit, for a total of approximately ILS 4.5 million.