Banks' Civil Liability to Customer Deposits

Banks, whether public or private, as one of the most important economic organisations by mobilisation of financial resources through taking deposits and with the intention of making profits make investments and give loans to their customers. The expansion of economic relations and the needs of the people to banks requires a carful investigation of the legal nature of banks’ relationship with their customers whether legal or natural persons or otherwise. In the past, the banking was simple and elementary. In such an environment in the case of emergence of any problem or issue and in case of causing damages to banks’ customers, it was easy to identify the cause of the damage as the banks and their customers were in interaction in person and their relationship was not complex and extensive as they are now. Nowadays, given the technological advances and the advent of electronic communications has led the banks to utilise these technologies and provide new services via new methods to their customers. The use of such new technologies has led to new complexities between banks and their customers. Given such complex relations, it is possible that customers suffer some damages and they seek compensation.  Depending on whether such damages are could come under a contractual relations or be based on a tort, the method of compensation varies. Banking contracts such as  interest free loans, Joaleh, Mozarbeh as example of a contractual relationship between banks and their customers. However, the legal basis of the contractual and non-contractual liability of the of banks vis-à-vis their customers could be found in in the general and special legislations such as Articles 11 and 12 of the Civil Liability Act and also Article 35 of the Monetary and Banking Act according to which “each bank is liable to compensate the damages which has been caused to their customers  due to the banking operations of the bank”. Based on the prima facie understating of this Article, there is no need to established the a bank’s fault and only the relationship between the damages caused to the customer and the bank’s activity is enough. There are a number of legal vacuums and defects in the relationship between banks and their customers. Nowadays such deficiencies and failures in the banking sector do exist. Therefore, taking into account general legal rules and principles of civil liability, no damages should be left without compensation. The banking deposit should also follow the same route.