A couple entered into an agreement to balance resources under which it was agreed that the man would pay the woman in 4 installments and give her an irrevocable power of attorney to transfer the rights to the land in her name, until full payment is received. In practice, the man did not meet the payment deadlines but the woman did not exercise the security.
The Court held that the woman is not entitled to compensation due to the non-payment, because she did not take measures to mitigate the damage. Israeli law stipulates that an anticipated breach is a situation under which a conduct of a party to a contract or objective circumstances indicate that a party to the contract is not interested, or able, to fulfill its contractual obligations. The injured party may ignore it or rely on it. Ignoring means insisting on the fulfillment of the contract in its original form, including the fulfillment of the obligations of the injured party. Relying on the breach requires taking measures to mitigate the damage by the injured party, in order to be entitled to compensation as a result of the breach. Here, the woman saw that the man does not meet the payment obligations but did not act to exercise the power of attorney which served as her security and therefore did not take measures to mitigate the damage. Therefore, she is not entitled to compensation due to the breach.