An organizer of real-estate acquisition groups and a businessman entered a founders agreement to establish a company and cooperate in projects of the organization of real estate acquisition groups. After a while, the parties signed a separation agreement with the aim of ending the cooperation and set an agreed frame of distribution of the profits from the project conducted by the company and future projects. However, the separation agreement was later canceled due to its breach, and one of the parties demanded to receive a percentage of the future projects of the other party in the field, inter alia because the other party used data of the company (such as details of suppliers and customer and pricing methods) for the new projects, in breach of the confidentiality clause in the founders agreement.
The Supreme Court held that termination of a contract due to its breach does not cancel the agreement ab initio but applies as of such time and on, subject to the intention of the parties and the principle of good faith. Fully reviving the founders agreement upon termination of the separation agreement is unreasonable because it is impossible to cause the parties to continue to work together to organize acquisition groups. However, the aspects of the founders agreement dealing with the rights in the company, including the rights in the project that has already been done, are reinstated upon the termination of the separation agreement. Therefore, the distribution of profits from the existing project will be in accordance with the founders agreement, while the parties do not have rights in future projects of any of them. The use by one of the parties of the company's confidential information constitutes a breach of the duty of confidentiality, but does not create a partnership for the other party but a right to compensation for the breach.