What do the banks owe you
|
|
Whether it’s the latest mega-merger news or an announcement of record quarterly profits, Canada’s banks regularly make headlines. Banks are a pervasive feature of modern financial life and a key element of our nation’s economy. At some point in our lives, most of us will owe a bank money in the form of debt and service charges. These are legal obligations. What many people do not know is that there are significant and stringent legal duties and obligations owed by banks to their customers. Banking is a business. Like any business, a bank enters into relationships with its customers. Legal duties flow from the different functions that banks perform. M.H. Ogilvie, in his Canadian Banking Law, 1991 has summarized these relationships very adeptly: “Where a bank lends money to another person, whether secured or unsecured, the legal relationship is one of loan as between lender and borrower. Where a bank offers safekeeping or safety deposit box facilities, the legal relationship becomes one of bailment. Where a bank gives advice or induces reliance on its statements, any subsequent liability resulting from losses incurred in reliance by another person may be characterized in tort, thereby creating a tortious relationship, or as a fiduciary relationship in which there has been a breach of a fiduciary duty. When a third party undertakes to guarantee a loan made by a bank to its customer, the relationship is one of guarantee or of a secured transaction. Where another person places money on deposit with a bank the relationship has been characterized as one of contract or of debtor and creditor.” There are different legal obligations and duties that arise from some of these relationships, which for present purposes will be divided into two broad categories: contractual and fiduciary. It likely goes without saying that this is a complex and developing area, so this article is by necessity introductory in nature Source : accessmylibrary.com |