Afik & Co.

Except in extreme cases a company filing a Court claim will need to deposit a security for the expenses of the defendant

July 3, 2019

A company supplying medical services filed a claim against a supplier of video calls applications that were to be used for the supply of medical services by the company’s doctors to its clients. The Court obligated the company to deposit a security for the expenses of the defendants as a pre-condition for proceeding with the claim. The corporate veil enables...

Purchase of real estate requires a written agreement but if lost one can bring proof that it existed

July 2, 2019

Two brothers purchased a storage in a commercial center 40 years ago but never recorded the ownership transfer and when they asked to record the property on their name instead of the contractor they discovered that there is no copy of the sale agreement or proof that they paid the full consideration. The Court accepted the claim and ordered the property to be...

A non-exclusive distributor is not entitled to a notice period prior to the termination of the distribution agreement

July 2, 2019

A supplier decided to raise the price of the products it sells to its distributor and reduce the quantity of products sold to the distributor, due to failure of distributor to meet sales targets. The Court rejected the distributor's claim and held that the actions are not a breach of contract by the supplier. An exclusive distribution agreement usually includes...

Holding of shares in escrow must be recorded at the shareholders registry

July 2, 2019

Investors in a company-owned construction project contended that the shareholder in the company holds shares in escrow for them and demanded that the shares be registered in their name, as well as the termination of the director's term of office due to his indictment in a criminal offence. The court rejected the claim. The Companies Law requires that a shareholder...

When the target market for a product is sophisticated, the chances of consumer misleading are low

June 17, 2019

A manufacturer of machines contended that a competitor copied and reproduced the machines developed and produced by it. The Supreme Court rejected the claim. Design infringement occurs when a person, who does not hold the right, manufactures and sells a product that comprises the design or imitates it. Passing off occurs when there is concern of misleading...

Enforcing a contract in a manner other than the agreed essence can only be demanded under exceptional circumstances

June 13, 2019

The Ashdod Port published a tender for supplying marine bunkering services at the port as part of its legal obligation to provide the services. The winner undertook to provide bunkering services with two barges and even rejected contention of being a losing offer. One year after commencing operations, the company demanded a change in the tender conditions to...

In dismissal due to reductions the duty of hearing and the demands deriving therefrom are minimized

June 13, 2019

An employee was called for an immediate meeting with a manager at the company during which he was informed that he is dismissed for reasons of reduction. The Court ordered the employer to compensate the employee for lack of a hearing. The obligation to hold a hearing is not an absolute obligation or a “ceremony” that must be fulfilled as an eyewash. It is a...

A purchaser of real estate that does not check the property prior to the purchase risks losing its rights

June 11, 2019

A property was sold twice and registered under the name of the second purchaser, the later in time. The Court held that despite the negligence of the first purchaser to record a cautionary note it should be preferred over the second purchaser, who was aware of the existence of a possessor of the property and still did not bother to perform basic checks before...

A local authority is not obligated without a written order signed by all authorized signatories

June 4, 2019

A contractor performed an urgent work on the basis of a letter of commitment signed by the municipal engineer, but the local municipality contended that the letter is not binding force and refused to pay for the work. The Court held that only documents signed by the head of the local authority and the treasurer will bind the authority. A contractor performing...

A lessee may not suspend rental payments due to a claim of damage [

June 3, 2019

A lessor sought the evacuation of a lessee who canceled checks, inter alia, due to a contention of set-off and due to a claim of the lessor's debt to it due to damage. The Court accepted the claim and ordered the eviction of the lessee from the property. Obligation of the lessee to pay rent and obligations of the lessor to amend defects in the leased property...

In an investment in a company by an investor with personal relationship higher disclosure obligations apply

May 28, 2019

An investor lent money to a company under a loan agreement and concurrently signed a non-binding memorandum of understanding regarding investment, which expressly stated that it does not oblige until the signing of a full agreement. The investment agreement was never signed, and the investor demanded repayment of the loan both from the company and personally...

In a partnership unlimited by time each partner may dismantle the partnership by a notice

May 26, 2019

Parties signed an agreement to examine the feasibility of a business activity between them and later also a partnership agreement that specified a minimum period of time. Over time, the partners entered into a dispute and one of them notified of the termination of the partnership. The Court held that the partnership was duly terminated. A partnership agreement...

An employee of a wholly owned subsidiary of a public company may not demand the public company to pay his salary

May 21, 2019

A CFO of a private company handled the process of listing it on the stock exchange, and when the procedure failed, the process of a reverse merger into a public shell. It was agreed that he would start working as an external service provider to the company and would receive significantly higher fees and options in the company. The public company reported that...

Articles of association must be upheld even where its provisions were disregarded in the past

May 21, 2019

Shareholders of a company sought to sell their shares to a third party, but failed to first offer them to the other shareholders as per the right of first refusal set forth in the articles of association, contending that the majority shareholders disregard the provisions of the articles and refuse to involve the minority shareholders in managing the Company while...

In maritime transportation an arbitration clause limited to General Average/Arbitration does not apply to claims related to belated delivery

May 20, 2019

A company managing a ship and the ship owner contracted in a vessel lease agreement with an Israeli company for the shipment of palm oil from Singapore through the Philippines and Indonesia to Israel. The agreement included a provision setting that any General Average will be decided in arbitration in London, England, under the York/Antwerp Rules, but upon a...

The corporate veil does not protect officers from bad faith tortuous acts made by them

May 20, 2019

Purchasers of an apartment filed a claim against the contracting company as well as against managers of such company. The Court rejected the motion to dismiss the claim against the manager. Actions of an organ of a company are the actions of the company, which enable attributing to the company actions of an officer. However, attribution of an organ's action...

Publishing contention in a legal dispute to entities that are not parties to the dispute may be deemed defamation

May 20, 2019

Two business partners were involved in a business dispute and decided to dissolve their partnership. In the course of their dispute, one of the parties began to update the employees of the other party, its other business partners and service providers, while making allegations of fraud, embezzlement, forgery of documents, and more. The Court accepted the case...

Bitcoin is not a currency exempt from evaluation taxation but an asset taxable upon sale

May 19, 2019

A purchaser of Bitcoin sold it about two years later at a profit of approximately ILS 8M. The tax authority imposed capital gains tax on the profit. The Court rejected the appeal and held that under the definition of “Foreign Currency” in the Bank of Israel Law, a Bitcoin is an asset and not a currency and, as such, is taxable as such. Currency evaluation is...

An officer can not use company resources to obtain personal business opportunities

May 16, 2019

A shareholder who is also an officer of a company that provides security services, guarding servicer and secure logistics, purchased a business of managing ATMs. The company's second shareholder contended that it is a business opportunity of the company, which belongs to the company. The Court rejected an application to approve a derivative claim in the company....

A distributor selling counterfeit goods risks paying liquidated damages without proof of damage

May 15, 2019

A distributor sold fake products of a well-known personal care company in Israel and contented not to have known that they were counterfeit. The Court accepted the claim and held that the distributor is to pay compensation due to the sale of the counterfeit products without the need to prove actual damage. When a business causes that goods it sells, or services...

Not any party injured by breach of agreement has a lien on the assets of the breaching party but a linkage to the assets is required

May 13, 2019

A lessee of a showroom for kitchen and related goods did not pay rent and the lessor, upon evacuation of the property after the lessee entered liquidation proceedings, refused to release the showroom equipment contending that it has a lien over the equipment. The Supreme Court held that the lessor has no lien of the equipment. A lien is a right to hold an asset...

The maritime carrier and the ship are discharged from all liability in respect of the goods unless suit is brought within one year

May 12, 2019

A trader imported to Israel corn from the Ukraine by ship and insured the goods with maritime insurance. The goods were damaged by a fire that broke in the ship and the insurance company paid part of the damage to the trader and filed a suit for such amount against the ship. The trader also filed a suit against the ship but erroneously did this with a sister...

A “straw man” registered as a shareholder is personally liable for company’s city tax debt

May 9, 2019

A company that ceased to operate left considerable city tax debts. The city demanded that the shareholder be personally liable for the company's debt, but she contended to be a mere “straw man” and not the real shareholder in the company and thus should not be personally liable for company debts. The Court accepted the claim and held the registered shareholder...

Abandoning an obligation to act to change a planning status of land may be deemed a breach of contract

May 6, 2019

An owner of a land designated for hotels sold part of the rights in the land and the contract stipulated that the owner undertakes to act to change the planning status of the land in order to enable the building of vacation apartments and the contract was conditioned on approval of the change of the planning status. The change was not confirmed, the agreement...

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