Two parties negotiated the purchase of an apartment. The parties met to sign the agreement, which was marked as a "draft", but the seller refused to sign due to a tax issue.
The Court held that no binding agreement was executed and therefore the buyers are not entitled to damages for its breach. Israeli law stipulates that for the execution of a binding agreement, an offer, acceptance of the offer, intention to execute the agreement and specificity (sufficient terms in the contract) are required. Regarding the importance of signing the agreement, it is generally deemed a non-essential matter, however, under certain circumstances, non-signing can be an indication of the parties' lack of intention. Here, although the “draft” mark is not by itself an indication to whether the agreement is binding or not, the decision of the parties to meet in order to sign the agreement is a clear expression of their intent to enter the agreement. However, the the seller did not sign not merely as a technical act, but because she objected to signing due to a tax issue and thus the sale transaction was not executed and the buyers are not entitled to compensation.