A farm owner terminated a partnership agreement with a company engaged in the marketing and construction of solar systems in favor of an engagement with a competing company, contending that he was entitled to terminate the partnership agreement at any time.
The Court partially accepted the claim and the farm owner is to pay compensation for the loss of entrepreneurial profit as the termination of the partnership agreement was done unlawfully. Under the Israeli Partnerships Ordinance, if a fixed period for the existence of the partnership has not been agreed, each partner may terminate it at any time by giving notice of its intention to all the other partners. However, the partner has no right to frustrate the commencement of the partnership's activity and to renounce its obligations in bad faith. Here, the owner of the farm prevented the installation of solar panels on the roof of a building he owned and in fact frustrated the partnership's activity even before it began, only because of a desire to contract with another company in order to maximize its profits. Therefore, the termination of the partnership agreement was done in bad faith and the owner of the farm will compensate the company for the loss of entrepreneurial profit.