Newsletter-21

255 LAW OF OBLIGATIONS The Scope of the Banks’ Liability Primarily, the scope of the banks’ contractual liability is deter- mined within the auspices of the mandate agreement. Regulated under Art. 502 et seq. of the TCO, the mandate agreements require a certain level of trust between the attorney and its client; however, this level of trust is particularly heightened when it comes to mandate agreements concluded with banks. The banks shall act with objective diligence when fulfilling their contractual obligations 3 . The objective diligence obligations of banks has been subject to many Court of Cassation (“Court”) decisions, where the Court has determined that consequent- ly the banks shall also be liable for their minor faults. Many of these decisions relate to unintended money transfers from the accounts of deposit holders, where the Court has found the existence of a causal relationship between the damage, and the violation of the objective diligence obligation sufficient for liability 4 . In doing so, the Court makes reference to TCO Art. 115(3) that reads: “Article 115(3) – Any prior non-liability agreements regard- ing the non-liability of the debtor from its minor fault shall be null and void provided that the debtor offers a service, occupation of craft requiring expertise that can only be engaged in with a per- mission granted by law or an official authority.” In a recent judgment of the General Assembly of Civil Chambers, reasons are summarized for banks’ objective diligence obligation, as follows: “In the case at hand, it should be stated since one of the par- ties is a bank; banks are institutions which operate under heavy supervision and intervention of the state and in compliance with some special principles laid out for them. This peculiar character- istic of the banking sector results in a sense of special trust in the eye of the general public in their transactions with the banks. (…) Such undertaking was provided by a bank which shall act as a prudent merchant and comply with its objective diligence 3 Battal , p. 124. 4 Please see. The General Assembly of Civil Chambers Decision numbered 2013/11-2426 E. 2015/1540 K. and dated 10.6.2015.