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Duty of Disclosure - Provisions of the Sale Law
- The defendant should have disclosed the full data regarding the postponement of the execution of the land survey, since he was aware of all the data in this matter. He also knew that the buyers' expectation was that he would complete all the conditions of the approval in principle, including conducting a land survey to the satisfaction of the Ministry of Environmental Protection.
The plaintiffs are entitled to rely on the non-conformity in view of the provision of section 16 of the Sale Law , according to which: "If the non-conformity stems from facts that the seller knew or should have known about at the time of the conclusion of the contract and did not disclose them to the buyer, the buyer is entitled to rely on it notwithstanding what is stated in sections 14 and 15 or in any agreement, provided that he gave notice of it to the seller immediately after discovering it."
In accordance with the provisions of this section, when there is a discrepancy arising from facts that the seller knew or should have known about and did not disclose to the buyer, the buyer is entitled to rely on it notwithstanding the provisions of sections 14 and 15 of the Sale Law or in any agreement. In our case, the termination of the contract is not at the time of its signing, as the defendant claims, but at the time when the suspended condition was fulfilled and the contract was perfected. At that time, the defendant must have known of the incompatibility. The duty of disclosure imposed on the seller is an active duty and the defendant cannot exempt himself from the fact that the purchasers are companies engaged in real estate and have extensive knowledge and experience in the construction and operation of gas stations.
The interpretation given to the aforementioned section 16 in the majority opinion in Other Municipality Applications 8068/11 Eini v. Shifris (February 11, 2014), is that the rule regarding "the buyer's caution" should not be applied where the seller knows the facts in its entirety, and only actual knowledge of the buyer's knowledge of the non-conformity will relieve the seller of his duty to bear the consequences of non-disclosure. It was also determined that the seller can be held liable even in a case where he believes that the information is marginal and unimportant. In our case, and as will be detailed below, this is not insignificant information, since the agreement in which Idan was a partner prevents the construction from commencing until the completion of the land examination.
- The defendant claims that there is no causal connection between the breach of the duty of disclosure and the decision of the purchasers to enter into the agreement. According to him, the land survey has no impact on the refinement of the agreement; Even if the contamination had been discovered before the date of receipt of the permit, this would not have allowed the purchasers to renounce the agreement, and the results of the survey are already at their doorstep. In the agreement, the purchasers consciously and calculated assumed the full risk in relation to the possibility of contamination in the land. According to him, the defendant further emphasizes that the Kfar Saba Municipality renewed the building permit after the contamination was discovered in the land, and therefore the existence of the contamination would not have prevented the granting of the building permit.
I found this argument to be rejected.