The second consideration concerns the importance of the information, and in this context, the question of whether it is information "that significantly detracts from the reasonable expectations of the other party with respect to the transaction" (Friedman and Cohen (vol. 2), at p. 194); see also Civil Appeal 8227/20 Kassirer v. Amsalem at paragraphs 35-36 (July 12, 2023)).
The third consideration concerns the nature of the relationship between the parties. In this context, Friedman and Cohen note that a relationship of trust establishes a relationship that may establish disclosure obligations. It was noted, inter alia, that the case law also imposed a duty of trust on a person whose advice and opinion the other relied on due to the special trust he acquired for him, as well as on the parties to a joint transaction (ibid., at p. 207). The degree of trust and significance that must be attributed to him is derived from the factual circumstances of the concrete case (see Civil Appeal 230/80 Fender, Open and Building Investment Company in Tax Appeal v. Castro, IsrSC 35(2) 713, 723-724 (1981)).
From the general to the specific: Froimovich misled Werber about the maturity of the system
- The factual basis, as detailed above, leads to the conclusion that Froimovich misled Werber about a material matter in the transaction.
- Froimovich did not put Werber on the process of developing the software casually before entering into the deal (including without an orderly and structured characterization, without version and change management, without a separate development environment, and without automated tests). Nor did they disclose to Werber the significant risk that was clear to Shmulik close to the launch, as noted, regarding the expectation of many malfunctions as a result of the poor software development process and its low quality. Shmulik also did not correct the misunderstanding created by Werber, which stemmed from the incorrect representations he presented - as if the work on the site was almost finished in January and February; At the time, he presented that only "polishing" was required, as opposed to the actual situation in which the development of the system only began in January and significant work was done in late April and afterwards. Shmulik also made Werber understand - incorrectly - that a lot of money had been invested in the development of the website contrary to reality and in a way that instilled a sense of confidence in the quality of the software, and also in view of the great trust that Schwerber placed in Shmulik while relying on his professionalism as a reputable software man, as Omri also testified (p. 62 of the transcript, paras. 13-18).
- Software bugs and malfunctions are of course predictable and can also be assumed to be completely inevitable (or at a reasonable cost) even if the development is at a high level. Accordingly, standing in negotiations by a software developer who is unwilling to take responsibility that the software is perfect or that it was developed according to an accepted standard that is not sufficiently defined is legitimate. What is wrong with Froimovich's conduct is that Shmulik's messages planted Borber with the understanding that the development of the system was completed months ago and that in recent months they have been working on polishing only, and that a lot of money has been invested in the development in a way that has instilled an understanding that this is a high-quality system and that the software is ready to go live. This is while in reality the development process was casual and significant parts were developed at the "last minute" (contrary to what was presented) and without performing sufficient tests. It is also clear that during the negotiations with Werber, days before the launch, Shmulik was aware of the low quality of the software, and despite this, he "ran" to the launch while "constantly discovering new problems." Accordingly, the probable conclusion is that it was clear to Shmulik that problems were expected with the system after launch, beyond the inevitable malfunctions or bugs. However, Shmulik chose not to share this material information with Werber.
- Indeed, as emerges from the analysis of the claims and evidence above, many of Werber's claims of concrete deficiencies in the system in relation to what was presented (functions that did not exist at all) were not accepted. Even the malfunctions that were discovered do not anticipate being complex to handle. The malfunction in the display of leads to marketers, which was critical in terms of marketers' trust, was dealt with in a relatively short time, and it also seems that it was not complicated in fixing. The other faults that Werber pointed out also do not appear to be complex and appear to have been addressed within a short time.
However, the main difficulty, as noted, is not the complexity of the concrete malfunctions (of which Shmulik was presumably unaware) and the immateriality of most of the functional deficiencies in the software. The difficulty in Froimovich's conduct is that Froimovich did not share information with Werber regarding the fragility of the system and its prospect of malfunctions if it is launched as planned, in view of the poor nature of the development process and its consequently low quality. The mere fact that there is no accepted standard for WordPress systems, as the expert testified in the cross-examination (p. 75 of the transcript, paras. 8-12), does not detract from the existence of indicators for quality and professional development, as the expert's opinion indicates. It is possible to accept Froimovich's claim that as partners in the venture they had an interest in its success and also to assume that they believed that the problems that would be discovered would be solvable and that in their view it was right to move forward in the launch process, but even if they believed so, they were not allowed not to disclose the information to Werber prior to Werber's entry into the venture by investing a significant sum.