Maya and Gidi Barber, have signed on 14/12/14 on a document with the headline, "proposal irrevocable purchase”. This document was delivered to Eran Amour, who was the owner of a plot in Kiryat Tivon and was supposed to build a luxury residence on the plot.

The price was set to 2,650,000 NIS.

Together with the offering document, the parties reached an agreed-upon version of the sale agreement, but the agreement was not signed.

Upon signing the offer, Maya and Gidi deposited a sum of 265,000 NIS in Eran's lawyer's trust.

Maya and Gidi contacted an interior designer who made design plans which were transferred to Eran. Negotiations were held between the sides and the parties reached understandings regarding the construction work and the necessary changes.

After about 10 months, Eran sent via his lawyer, to Maya and Gidi, a short e-mail stating that Eran had rejected their offer to buy the apartment, without providing any explanation.

Maya and Gidi filed a claim with the court, claiming that a binding contract was signed between the parties, and therefore Eran must compensate them for all their damages.

The court held that even though the sale agreement was not signed, it was evident that its terms were agreed upon and that Maya added heart-shaped markings to the agreement in order to ensure that the agreed wording would be preserved. It was also evident that an agreement was reached on the technical specifications of the apartment.

The court stated that when a person chooses to negotiate with another party prior to the conclusion of an agreement, a special relationship is created between the parties, a system based on mutual trust.

Abandonment of negotiations may stem from dishonest motives.As the negotiations progress, the closer the parties are to ending, the greater would be the fines which will be imposed on the party wishing to withdraw from the negotiations.

The court held that from all the documents and evidence it was evident that both parties were seeking to execute a sale of an apartment. Eran's resignation from the negotiations constitutes bad faith behavior, which grants Maya and Gidi the right to demand compensation for violating the obligation to behave in good faith.

The plaintiffs argued that they should be compensated for the difference between the price of the apartment stated in the contract - 2,650,000 NIS, and the value of the apartment at the time the agreement was canceled. The court ruled that the value of the apartment at the time of canceling the agreement was 2,900,000 NIS, and therefore the plaintiffs, Maya and Gidi, were entitled to compensation of 250,000 NIS.

In addition, the court ruled that Maya and Gidi deserved compensation for mental anguish. Maya and Gidi wished to buy the house of their dreams and they spent a lot of time to fulfill their wish, which ended in great suffering. Therefore, the court ruled that Maya and Gidi deserved compensation for mental anguish of 75,000 NIS.

All in all, Eran was forced to pay Maya and Gidi a sum of 325,000 NIS.

This judgment clearly demonstrates the need for great caution when conducting negotiations, particularly in matters relating to land and commercial transactions.

For comprehensive legal advice regarding various contracts and transactions, including the negotiations prior to signing the contract, please contact the attorneys in our office.

• File 28877-03-16 Maya and Gidi Barber, v. Eran Amor, was given on 17 April 20 at the Haifa District Court.