A woman entered into an allocation agreement of shares in a company purchased by an experienced businessman in whom the woman trusted in light of his experience. However, the businessman did not disclose to her all the information regarding the consideration paid for the company shares.
The Court held that woman was presented with false representations and therefore she is entitled to damages. Israeli law imposes an obligation to act in good faith during negotiations, and inter alia an obligation to avoid misrepresentation. The duty of disclosure is reviewed in light of the information and power gaps between the parties, the relationship between them, and the importance of the information. Here, the businessman had information that was not disclosed to the woman which was critical for the purpose of calculating the chances of success of her investment, when the woman trusted him in light of his experience and his assessments of the company's chances of success. In addition, there were power differences between the parties due to the fact that the woman is not experienced in the business world. Therefore, the woman is entitled to damages for the misrepresentation.