A car hit a bicyclist. As the car was not insured Karnit (the State insurance fund) compensated and demand reimbursement, inter alia, from a car trader on which trading license the vehicle was registered. The trader argued that it sold the car in installments and thus the car remained registered on its name until payment in full.
The Court held that in case of an uninsured vehicle Karnit may sue for reimbursement the owner for enabling use of the car without insurance (respondent superior liability). A contract clause of retention of ownership may be construed as a hidden pledge (in which case the ownership passes) or as a real retention of ownership when this is the intent of the parties. Here the purchaser had only the right to use the vehicle until payment in full and was also not allowed to sell it. Because the trader did not condition the use of the car on insuring it, the trader was found personally liable.