A couple sold their apartment but did not cooperate with the purchasers to complete the transaction because they understood, allegedly, from their lawyer, that they had a 'right to withdraw' from the transaction subject to the payment of liquidated damages.
The Court accepted the claim and held that the sellers are obligated to complete the transaction and fulfill their obligations towards the purchasers. Under Israeli law, one who entered into the contract due to a mistake and it can be assumed that if it were not for the mistake he would not have entered into the contract and the other party knew or should have known about it, it is permissible to terminate the contract. If the other party did not know and should not have known about it, the Court, at the request of the erring party, may terminate the contract, if it deems it just to do so. Here, the agreement stated that if the agreement is terminated due to a material breach, the breaching party will pay the other party liquidated damages in the amount of 10% of the transaction. The agreement does not grant an "exit option" which allows any given party to opt-out of the transaction by paying the liquidate damages and in any case, if such a right existed it is the harmed party’s right (the purchaser) and not of the breaching party (the sellers) who may chose not to consummate their obligations. The purchasers were not at all aware of the sellers' "belief", if actually existed, because otherwise they would not have acted as they did when they paid the sellers' creditors a total of ILS 800,000 as part of the consideration, sold their old apartment, enrolled their children in educational institutions near the new apartment and even planned to renovate the apartment. Under these circumstances, it is not just to order the termination of the agreement and the sellers must complete the transaction.