An Angel Named 'The Bank': The Bank's Fiduciary Duty as the Basic Theory in Israeli Banking Law
36(1) Common Law World Review 27 (2007)
23 Pages Posted: 22 Apr 2014
Date Written: 2007
According to Israeli law, the bank owes a fiduciary duty to its customers. However, recently, the Israeli courts have expanded the doctrine of the ban's fiduciary duty in various ways: In terms of the content o the duty; in terms of the scope of the beneficiaries – other than customers – that are entitled to the duty; and in terms of the remedies granted in respect of breach thereof.
The thesis presented in the article recognizes the fiduciary duty as a justified and worthy instrument protecting the bank's customer. Nevertheless, due caution must be taken against a sweeping expansion of the duty. Determining the degree and nature of the fiduciary duty is a powerful process, which not only influences the relationship between the bank and its customer, but also affects third parties and the public in general. Excessive application of the fiduciary duty would create an incorrect balance of social, economic and business forces, both in theory and in practice. Determining the content, scope and characteristics of the bank's fiduciary duty must, therefore, be done in a moderate manner, while drafting a cautious judicial program and conducting a true examination of the legal propositions underlying this program.
Keywords: bank-customer relationship, Israeli banking law, fiduciary duty, remedies, garantor, waiver
JEL Classification: K12, K23, K29, K39, N20
Suggested Citation: Suggested Citation