A person contended that he executed an agreement under which he invested in the venture because he was misled by the other party, who hid from him the existence of additional investors. However, that person continued to invest money even 3 years after he learned of the existence of additional investors.
The Court held that the agreement was made due to misrepresentation, but that the person is not entitled to restitution. Israeli law stipulates that the person who entered into the contract because he was misled by the other party or someone else on his behalf, may cancel the contract. However, in order to receive restitution, it must be justified under the circumstances of the matter. Here, although a false representation was made regarding the existence of the additional investors, the person who was misled chose to continue to transfer funds even three years after he learned of the existence of the additional investors. Hence, it cannot be said that the funds were transferred due to the misrepresentation. Therefore, the person is not entitled to restitution of the investment.