Following radio interviews, which were actually part of a paid marketing campaign for the purpose of recruiting investors for the company's activities, a man invested ILS 1.6 million in a high-tech venture that actually had no real activity, equity or other investors, while showing him that a respected law firm was accompanying the company, presentations of a guaranteed return and an exit for investors in the company and that the company's lawyer would also represent him.
The Court accepted the claim, and obliged both the company and those who made the representations in repayment of the investment amount and expenses. The elements of fraud are a mistake on the part of one of the parties; a deception by which the other party misled him; and a double causal link between the mistake and the entry into the contract and between the deception and the mistake. The fraud may be by way of an action or an omission. Here, the investor was proactively revealed to that it was a risky investment and that the company had no additional investors or equity. In addition, he was presented with inverted representations about the start-up company and that he should expect quick profits. Therefore, it is clear that but for these representations he would not have believed the reality presented to him, and would not have been tempted to sign the contract and therefore the contract should be rescinded and the investor refunded and paid his expenses.