A person claimed to be entitled to finders a fee in respect of linking between a group of buyers and a shareholder who later sold its shares to them. The finders fee agreement demanded that the middleman be the effective element in the transaction. Negotiations were stopped and after a period in which negotiations were held with another potential purchaser the same middleman brought negotiation restarted and an agreement was signed.
The Court dismissed the claim and held that unlike real estate transactions in a commercial transaction the middleman is requires to be involved in the negotiations and not only introduce the parties. Where negotiations stopped and another party later re-initiates it one should check the circumstances to see whether it is a new negotiation or continuation of the previous one. Some of the elements that may teach whether it is new negotiations are the degree of similarity between the original proposal in which the middleman was involved and the contract finally executed, how much time passed, involvement of the middleman, was there another factor that assisted the parties in obtaining the contract and now much was such new factor involved and has the parties commenced the negotiations ab-initio or continued their negotiations from where it stopped. In this case new negotiations commenced and the middleman, who was not involved in the new negotiations, has no right for a fee.
An appeal to the Supreme Court was withdrawn upon recommendation of the Court.