Was the cancellation of the agreement in this case done in bad faith?
- From the rules for their application: In the circumstances of the case, was the exercise of the right of cancellation by the seller done in bad faith, and therefore the agreement was unlawfully cancelled? As I noted above, I am of the opinion that in the unique circumstances of the case at hand, this question should be answered in the affirmative. This is so, since in my opinion the seller should have given the buyers an extension before cancelling the contract (see and compare: Shalev and Adar, at pp. 599-600; Friedman and Cohen, at p. 327; Micro case, at p. 177), and since the aforesaid extension was not granted, he acted in bad faith. In the present case, therefore, granting an extension would have turned the exercise of the right of cancellation from the use of the right in bad faith to an act in good faith; and as a result of this, the unlawful cancellation of the contract is the cancellation of it lawfully.
I will now detail the cumulative reasons that lead to this conclusion, with the emphasis in this examination being given to the conduct of the The seller - As the person who cancelled the agreement - unlike the way the trial court acted, when it placed most of the emphasis on the conduct of the purchasers.
- First and foremost, as stated, the seller delayed receiving Form 4 by about three months beyond the one-year period agreed upon by the parties; when this delay constitutes, in itself, a fundamental breach (also agreed) of the agreement. In my opinion, this delay should have an effect in the circumstances of this case on the deadline for payment of the balance of the consideration. Thus, when the parties have stipulated the date of payment of the balance of the consideration for the receipt of Form 4, the balance of the consideration will be paid within 10 business days (and at the latest after the extension of the grace) from the date on which the Form 4 will be received, the balance of the consideration will be paid. In these circumstances, I am of the opinion that a strict insistence on the fulfillment of the contractual deadlines, on the part of a party that has significantly delayed the fulfillment of its obligation, which constitutes a precondition for the payment of the balance of the consideration (without deciding whether there is a causal connection between the delay in receiving Form 4 and the delay in the payment of the balance of the consideration), which is also a fundamental breach, cannot be considered conduct in good faith. It should be noted that the parties did not stipulate a stipulation in the contract regarding the agreed dates, given a fundamental breach of the undertaking to receive Form 4 within 12 months from the date of the conclusion of the agreement; Therefore, there is still a requirement to pay the balance of the consideration within 10 days from that date. However, in circumstances where there has been a significant delay in receiving Form 4, strict insistence on the right of cancellation due to a delay in the payment of the balance of the consideration, which, as we shall see below, is not significant, constitutes an action done in bad faith.
It should be clarified that the delay in receiving Form 4 created uncertainty on the part of the purchasers regarding the manner in which the agreement would be fulfilled in terms of its dates - since it was not known when Form 4 would finally be accepted, and for how long the breach of the agreement would last. Accordingly, the buyers could not have financed their steps in an intelligent manner in order to ensure that the mortgage money would be in their hands on the date allotted in the agreement. Specifically, the contractual risk distribution imposed on the purchasers the responsibility of being prepared and willing to pay the balance of the consideration as quickly as defined in the contract (10 business days plus 7 days of grace extension) within the year allotted for obtaining Form 4 (i.e., until July 5, 2021). However, after the seller did not meet this deadline, they cannot be considered as having violated the contractual allocation of risks by not being prepared and willing to pay the consideration as quickly as defined in the contract in the subsequent period as well.