Contractual banking duty of care

We have previously considered the banking duty of care. In the first part of the series, we distinguished between the general and special duty of care, between the contractual (toward the bank's customer) and the extra-contractual duty of care (toward a third party), and between a bank's civil law and public law duties of care.

In this second article, we take a closer look at a bank's contractual duty of care to its customer and, in particular, we look at the duty of care set forth in Article 2 of the General Banking Conditions (GBC).

Contractual duty of care

Banks have a duty of care to their customers. This duty of care is usually based on the supplementary effect of reasonableness and fairness (Art. 6:2 BW and Art. 6:248 paragraph 1 BW). This means that what the parties (bank and customer) have agreed can be supplemented by reasonableness and fairness.

Almost all banking relationships in the Netherlands are governed by the General Banking Conditions. These conditions were drawn up in consultation between the Dutch Banking Association and the Consumers' Association. The ABV, if validly agreed, apply to both private clients and non-private/business clients of Dutch banks. The most recent conditions date from March 1, 2017.

An essential part of the GTC is the duty of care provision in Article 2. This states that the bank has a duty of care to its customer and that the customer must also act with care towards the bank and not abuse the bank's services. As far as the bank's duty of care is concerned, it implies that the bank is careful in its services and that it takes the customer's interests into account to the best of its ability. This duty of care is a best-efforts obligation and not a result obligation and is in line with the best-efforts obligation a contractor has towards his client under the law. This duty of care is an elaboration of the principle of reasonableness and fairness mentioned above (Art. 6:248 BW).

The scope of the duty of care is virtually unlimited and implies that the bank's duty of care plays a major role in the bank's provision of services. These services relate to all parts of the banking relationship, such as the financing relationship, payment transactions, asset management, securities trading and the advisory relationship. Even when terminating a bank credit, the bank must take into account the interests of its clients to the best of its ability, and a termination of a credit agreement, although permitted under the contract, may still be unacceptable by the standards of reasonableness and fairness.[1] We have previously written about the circumstances that may be relevant in the case of termination of credit

As a rule, the care to which the bank is bound towards clients goes beyond the care that contracting parties must exercise towards each other under normal circumstances because of the bank's special position in society and because of the bank's expertise.

The contractual duty of care entails that the bank must act with due care when providing services, taking the client's interests into account to the best of its ability. This entails, for example, that the Bank must strive to provide comprehensible products and services and comprehensible information about them. Under special circumstances, this duty of care goes so far that the Bank must protect private customers from themselves and/or warn them to a far-reaching extent of the consequences of their intended actions.

Conclusion

For the concrete interpretation of the Bank's duty of care, all the facts and circumstances in a specific case must be considered. For example, the following circumstances may play a role: the Customer's possible expertise, income and capital position, experience and objectives (the Bank's duty of investigation), whether the Bank has made the Customer aware of certain risks and whether the Customer was aware of them (duty of information), etc.

If the bank has breached its duty of care to a customer, there is a breach of the banking relationship. If that performance is permanently impossible, the default is thereby established and the customer can claim damages from the bank.

[1] ING/De Keijzer, ECLI:NL:HR:2014:2929.