A customer ordered from a company a unique custom-made pergola manufactured abroad. Despite repeated promises by the company manager for a year and four months, the pergola did not reach Israel, and the manager was demanded to repay the advance payment and personally pay damages.
The Court accepted the claim and held that the manager's promises were made in bad faith and therefore he bears personal responsibility. The duty to act in good faith in the fulfillment of a contract is imposed on the person who executes the contract, even if he is an agent of another. In order for an answer or promise by an organ to be deemed a bad faith representation with signs of deception or fraud, in a manner that justifies imposing personal liability on the manager, it is necessary to show that it knew, or should have known, at the time that there was no truth in its answer or promise. Here, the company was a sole proprietorship owned by the manager's spouse, with the manager serving as the 'field manager’ who was entrusted with the actual management of the company. The manager did not provide answers and general assurances such as "the matter is being handled" or "it will be fine", which do not necessarily establish personal liability, but rather the manager dragged the customers for many months and provided promises and stories regarding the 'progress of the order' and the delivery dates that did not reflect reality and while knowingly or blindly providing misleading information. Therefore, the manager acted in bad faith and he will repay the advance payment to the customers and pay them damages.