Potential purchasers of an apartment canceled a meeting that was set for the purpose of execution of the sale agreement one day before the set date, inter alia, because they wanted to reduce the transaction’s consideration.
The Court held that in negotiations for the conclusion of a contract, one must act in an acceptable manner and in good faith. Even withdrawal from negotiations prior to execution of a contract must be made in good faith. The more advanced the stage of negotiations and the closer the parties are to reach an agreement, a clearer reason is required to justify the withdrawal.
Here, the negotiations were intensive and some of the components of the agreement were yet to be agreed upon, including the price. Close to the execution date an obstacle was discovered regarding the ability to transfer the rights in the apartment under the name of the purchasers and also there was a justified concern regarding the date of eviction of the tenants.Therefore, despite the fact that the withdrawal from negotiations was only one day before the execution date, the potential purchasers acted in good faith and out of considerations that stemmed from the nature of the transaction and therefore were entitled to withdraw from the negotiations even if they wanted to reduce the consideration.