Landlords notified the tenants of the termination of the lease and prevented them from exercising an option, contending that they intended to sell the apartment. In practice, the apartment was not sold but was rented to others at higher rents, and the tenants were forced to rent another apartment at a higher price.
The Court accepted the claim in part and held that the eviction notice was given unlawfully and constituted a breach of agreement. According to Israeli law, any right deriving from a lease, including the right to terminate the contractual relationship, must be exercised in an acceptable manner and in good faith. The principle of good faith is intended to prevent a party to the contract from taking advantage of a contractual stipulation in a manner that does not correspond to the reasonable expectations of the other party. Exercising the right of termination without real intention deviates from its purpose and constitutes an abuse that is contrary to the duty of fairness. In this case, the lease agreement stipulated that if the landlords wanted to sell the apartment, the tenant would not have the option to extend the lease period and it would be terminated. Despite this, the landlords did not take any real action to sell the apartment, but rented it out shortly afterwards at a higher price. Therefore, in the absence of a real intention to sell, the exercise of the right of termination deviates from the purpose for which it was granted and constitutes a breach of the agreement, and the landlords will compensate the tenants for the damage caused to them.