Purchasers entered into a transaction to acquire real estate for the establishment of a gas station based on a presented building permit, but in practice the seller agreed with the authorities to postpone a required environmental soil survey without disclosing this upon the execution of the transaction, resulting in construction delays and the purchasers bearing expenses to complete the survey and financing costs.
The Court held that the seller must compensate the purchasers for breaching the duty of disclosure and acting in bad faith. Generally, Israeli law imposes an active duty of disclosure on a seller regarding a non-conformity arising from facts known to them at the time the contract is formed, and concealing material information regarding transaction conditions constitutes performing a contract in bad faith. Here, the seller committed to fulfilling the conditions for the approval in principle but concealed the agreement with the authorities to delay the soil survey, thereby creating a non-conformity that caused a delay. Therefore, the seller was ordered to pay the direct expenses for completing the survey and the financing costs during the delay period.