The Disputed Points
- The main questions in dispute between the parties are whether the agreement was lawfully cancelled and if it was lawfully canceled, what is the monetary compensation due to the plaintiff.
- Our approach to examining these questions will pass through an examination of the conduct of the parties from the date of the conclusion of the agreement until its cancellation, in order to determine whether the defendant's duty of good faith was breached, whether the provisions of the agreement were breached, and to the extent that they were breached, whether it was a breach that entitles it to cancellation. We will then turn to examine the requested remedies as well as the defendant's claims for offset.
The parties' evidence
- The parties submitted their evidence as part of the affidavits of the main witness. In addition to the plaintiff, her mother, Mrs. Tamar Dar (hereinafter: "Tami") and Ms. Sophie Dezanalzdeh, the branch manager (hereinafter: "Sophie"), also testified on behalf of the plaintiff.
On behalf of the defendant, Mr. Eran Shilon, the defendant's manager (hereinafter: "Shilon") and Mr. Ben Efrati, the defendant's deputy general manager (hereinafter: "Efrati"), testified.
- The parties' testimonies were heard as part of an evidentiary hearing on February 19, 2024 (references will be made to the transcript of the hearing of February 19, 2024), after which the parties summarized their arguments in writing.
Discussion and Decision
Lack of good faith during the negotiations
- Section 12 of the Contracts Law states that in negotiations prior to the conclusion of a contract, a person must act in an acceptable manner and in good faith. A party that did not act in an acceptable manner and in good faith owes the other party compensation for the damage caused to it as a result of the negotiations or as a result of the conclusion of the contract.
- As the Supreme Court clarified:
"The requirement of good faith means that the owner of the right must exercise his right honestly and fairly. Good faith does not obligate the right holder to ignore his self-interest. Good faith does not assume a "measure of piety"... Good faith assumes that the owner of the right is concerned with securing self-interest. However, good faith seeks to prevent the exercise of the right in disregard of the existence of the other party and in disregard of the social interest" (Civil Appeal 9474/03 Yoram Gadish Infrastructure and Construction (1992) in the Tax Appeal v. Musa, paragraph 18 of the [Nevo] judgment (November 21, 2006)).
- From a contractual perspective, the obligation to disclose significant and relevant information during negotiations is a derivative of the obligation within the heart:
"A breach of the duty of disclosure in the pre-contractual stage may have a variety of meanings... From the contractual aspect, which is relevant to our case, the non-disclosure may amount to contractual deception, or constitute a breach of the duty of good faith in negotiations...(See also the words of the Honorable Justice Englard Other Municipality Applications 8737/00 "Shepherd" Development and Building Company in Tax Appeal v. Jacques, IsrSC 56(4) 662, 668 (2002); and the words of the Honorable Justice Rivlin Other Municipality Applications 3051/08 Sassi Building Contractors, Dirt and Roads (1986) in Tax Appeal v. Ministry of Housing, paragraph 15 of the judgment [Nevo] (January 19, 2010)).