Having discussed the liability of respondents 4-5, we will now discuss the liability of respondents 1-3, against whom it was alleged that by being managers of the company, they breached duties towards the appellants.
Managers' Responsibilities
- The appellants attack the court's decision not to impose personal liability on
Respondents 1-3 who were the managers of the company during the relevant period. In this regard, the appellants claim the liability of respondents 1-3 for the breach of contract by the company, and the tort liability of these respondents. Is there any basis for these claims?
- I will begin with the question of contractual liability.. From the determination that it has not been proven that there was an agreement between the parties regarding the registration of a mortgage on the collateral asset in favor of Mizrahi Bank, the obvious conclusion is drawn that the registration of the mortgage in favor of the bank constituted a breach of the company's undertaking in the addendum to the contract to register a mortgage on the collateral asset in favor of the appellants: in the addendum, the appellants were granted the right to demand the registration of a mortgage on the collateral asset, in order to ensure that they receive the agreed contractual consideration. Registering a mortgage in favor of a third party on the same property could have thwarted the appellants' ability to exercise this right. In the absence of the appellants' consent to this, this is an action contrary to the contract, which amounts to a breach of it (section 1(a) toThe Contracts Law (Remedies for Breach of Contract), 5731 -1970). In this context, the failure to disclose the registration of the lien in favor of a third party constitutes a breach of the duty of good faith set forth in the section 39To the Contracts Law (General Part), 5733 -1973, from which the duty of disclosure between the parties to the contract is derived even after it has been concluded (see, for this matter, Civil Appeal. 3912/90Eximin s.av. Ital Style Ferrari Textiles & Footwear Ltd., Piskei Din 47(4) 64, 76; Yes they saw Civil Appeal 144/87State of Israel v. Eng. Faber Building Company, Piskei Din 44(3) 769, 778). This breach amounts to a breach of the agreement itself (see Civil Appeal 3912/90 supra, on page 78).
Are the managers liable to the appellants for these violations? The starting point