A contractor, who is not registered in the Register of Contractors, entered into a contract to perform construction, demolition and house building works. The agreement with the contractor was terminated a few days after the start of the work and the contractor sought, inter alia, damages for the profit that was expected as a result of the performance of the works.
The Court rejected the contractor's claim and held that the contract with him was duly terminated. A harmed party is entitled to terminate a contract if the breach of contract was fundamental. A material breach is a breach for which it can be assumed that a reasonable person would not have entered into the same contract had it foreseen the breach and its consequences, or a breach agreed upon in the contract as material. The Contractors Registration Regulations stipulate that the execution of framework works shall be performed by a registered contractor only, regardless of the cost of the project. Here, the contract stated a general clause according to which it can be terminated for any legal cause. Because the contractor is not registered in the Register of Contractors, it is not allowed to enter into a contract for the execution of framework works and therefore, the contract with it was legally invalid. Accepting the contractor's claim for compensation means creating a bypass to the law, which also carries safety importance. Therefore, the contractor is not entitled to any compensation due to the duly termination of the contract.