Lessees of an events hall discovered, one day after the transfer of a deposit given as guarantee to secure the lease, that legal proceeding with the previous lessee, who refused to evacuate the premises, ended by an undertaking of the lessor to enable the previous lessee to hold eight additional events during the rental period of the incoming lessees.
The Court held that a contract must be consummated in good faith and a party to a contract is entitled to terminate the contract in the event of an anticipatory breach – circumstances where the other party repudiates the contract or cannot or will not wish to consummate it. In this case, the lessor hid from the entering lessees the obligations to the prior lessee and disclosed the information only after receipt of the Lessees’ deposit, thus holding the entering lessees as hostages. Under these circumstances, the Court accepted the Lessees claim and held that the lessor's conduct was not in good faith and denial of exclusive possession of the leased premises on time constitutes an anticipated and material breach of the agreement which entitles its immediate termination as well as payment of compensation.