A subcontractor who entered into an agreement to perform finishing works abandoned the site and terminated the agreement before the payment date arrived (current +30), because the main contractor delayed payments of approved accounts and even notified that it did not intend to pay.
The Court accepted the subcontractor's claim and held that the agreement was duly terminated due to its breach by the main contractor. Israeli law grants the harmed party the right to terminate a contract immediately in the event of an anticipated breach. This cause of action arises when a party to a contract explicitly expresses its intention not to fulfill the contract, or when objective circumstances indicate an inability or unwillingness to fulfill it. In the case of a fundamental anticipated breach (such a breach that a reasonable person would not have entered into the contract had they foreseen the breach and its consequences), the harmed party is entitled to terminate the contract immediately. In the case of a non-fundamental anticipated breach, the harmed party is entitled to terminate the contract only after giving the breaching party an extension for its fulfillment and the contract was not fulfilled within a reasonable time after giving the extension. Here, the agreement with the subcontractor did not explicitly state that failure to meet payment terms is a fundamental matter. However, the repeated non-payment of fully approved accounts, coupled with the main contractor's notice that it does not intend to pay the account balance, constitutes an anticipated breach. Therefore, the termination of the agreement was duly done and the main contractor will pay damages to the subcontractor.