An Israeli distributor received a letter of authorization from a Chinese manufacturer stating that it is the exclusive distributor for one of its communication products to the Israeli YES company. Later, a competing distributor marketed to YES a similar communication product of another model, also manufactured by the same manufacturer. .
The court dismissed the motion of the distributor to accounts, demanding that the manufacturer and the competing company disclose their revenues and profits from the transaction, alleging that they had breached the exclusivity undertaking towards it. As a rule, a plaintiff is not entitled to seek an order for the rendering of accounts merely to ascertain how much the defendant owes him. This is an exceptional remedy, contingent upon the existence of a special relationship, such as agency, trust, or partnership, as well as a cause of action regarding the funds for which the accounts are sought. Business agreements often contain trade secrets, and therefore should not be disclosed lightly, especially in the absence of a solid legal right. Signing a letter of authorization, by itself, does not create a special relationship between the parties. In this case, the letter of authorization did not constitute a binding agreement but merely an initial consent to enter into negotiations; it referred to a different product and did not include essential terms such as the duration of the arrangement, prices, or scope of activity. Moreover, after signing, the distributor ceased contact with the manufacturer and even chose to market other products to YES. As for the cause of action, the distributor failed to show that it was entitled to any funds for which it was seeking accounts, as no agreement had been signed and no damage to the distributor had been shown at all. Accordingly, the application for the rendering of accounts was denied.