In case law, it has long been held that the remedy for a breach of the duty of good faith at the negotiation stage is limited, as a rule, to reliance damages, i.e., to "negative damages", the purpose of which is to put the injured party in the position he would have been in had he not entered into negotiations, and that the injured party is not entitled to compensation for the damages that might have been caused to him if the transaction had been completed (Civil Appeal 800/75 Moshe Kot v. Tenants' Organization in the Commercial Center, Ramat Yosef, Bat Yam, Ottoman Association, IsrSC 31(3) 813 (1977)).
Over time, the rule was expanded and it was determined that there are cases, even if exceptional, in which the court may award subsistence damages, i.e., "positive compensation", while placing the injured party in the position he would have been in had the transaction been completed. These cases were limited to situations in which the terms of the agreement were formulated and only the breach of the duty of good faith prevented it from being concluded. This depends on the circumstances of each case, taking into account the degree of bad faith, the expectations of the parties, the stage at which the negotiations are taking place, and other facts that may be relevant (see, for example, Civil Appeal 6370/00 Kal Construction Ltd. v. A.R.M. Ra'anana Construction and Rental Ltd., IsrSC 56(3) 289 (2002); hereinafter: "The Kal Building Case")).
It should be emphasized. The rule that applies to a breach of the duty of good faith at the negotiation stage is still a negative compensation award. As a rule, awarding positive damages requires great caution. It has already been determined that even if the sense of justice and the factual basis tend to award positive damages, their rulings are fraught with theoretical and practical difficulties. From the theoretical aspect, they can be seen as the imposition of a contract that the parties did not agree to enter, and from the practical aspect, the award of positive damages is based on speculative speculation and the determination of an estimate in relation to a contract that has not been perfected, while deciding in relation to vague factual circumstances. Therefore, it was held that although "there may therefore be cases in which positive compensation will be awarded, these will be exceptional, and will be given sparingly and to a degree..." (Civil Appeal 434/07 Arik Prinz v. Amirim Workers' Moshav of Vegetarians and Vegans for Cooperative Agricultural Settlement Ltd. [Nevo] (June 14,2009); See also: Civil Appeal 4832/23 Mul Hayam Ltd. v. Bat Yam Municipality [Nevo] (September 22,2024). For the sake of completeness, it should be noted that the list of remedies for breach of the duty of good faith in negotiations is not a closed list.