An example of bad faith that prevents proper grasp was detailed in other municipal applications 1925/95 Raphael v. Israel Construction Bank, [Nevo], 5 February 1997, where it was held that the bank knew that its client's financial situation would not allow it to give consideration for checks given for construction services. This extension of the requirement of good faith is unique to the circumstances of the case there and stemmed from the need to protect a consumer who purchased an apartment from a contractor, as was clarified in Civil Case (Shalom J.M.( 16274/00 Israel Discount Bank Ltd. v. Har Zahav Food Services Ltd., [Nevo], September 5, 2001.
- The manner in which the good faith of the holder of the note is examined in detail in the comprehensive judgment of the Honorable Justice H. Toker B.Civil Case (Shalom J.M.( 17431-04-16 Bank Leumi Le-Israel Ltd. v. Roy-Rom Fruit and Vegetable Marketing Ltd., [Nevo], July 15, 2020, and the references therein. The rule is that the examination of good faith is subjective, but there is an expectation that the holder will draw reasonable conclusions from the information in his possession and will not turn a blind eye to facts that warrant examination, as demonstrated there in paragraph 60:
"Regarding the circumstances of the taking of the note as having implications for the examination of good faith, I will refer to the judgment of the Honorable Justice Bar-Am in Civil Case (J.M.( 4318/06 Barak Content, Y.A.S. Ltd. v. Charles Hotel Company Ltd., [Nevo] (July 15, 2008), paragraph 6, where it is stated that:
"... In the appropriate cases, it is possible to reach the conclusion that the defendant acted in bad faith, where he refrained from asking or investigating, even though he secretly thought that something was wrong and feared that his questions would lead to the discovery of the facts in their entirety, regarding defects in the right of commerce (Dan 15/70 Code Ltd. v. Tel Hanan, Storage and Trading Company Ltd., IsrSC 26 (1( 36, 40). Indeed, it is true that the defendant is not obligated to investigate and demand regarding the right of trade, and one who did not know that the right of trade is defective will not be disqualified as a proper holder, but if he had investigated and demanded, the matter would have been revealed to him (Sussman, p. 273), but all this with the caveat that if there was something suspicious in the circumstances, the defendant would not be able to close his eyes, not to check and wash his hands cleanly (H.M. J.M. 830/78 Dr. Michael Daoud v. Ella Brothers Jerusalem Ltd., P.M. 5739 (2( 360, 353). In addition to the requirement of good faith, the Ordinance stipulates a supplementary condition regarding the holder's knowledge of the defective right of trade. In general, a holder will be considered a valid holder, only if he took the note in good faith and in the absence of knowledge of defects in the note (Lerner, p. 235). To be precise, the knowledge of the respondent that the payee traded the note into his hands, prior to the fulfillment of the condition, is in the sense of knowledge that the property right of the trade is impaired, in the sense of the provision of section 28 of the Ordinance, since the trading of the note was done unlawfully, since the payee should have returned it to the maker of the note (Lerner at p. 237).