BANKS, FIDUCIARY OBLIGATIONS AND UNCONSCIONABLE TRANSACTIONS

Abstract

The concern of the courts with the fiduciary relationship goes back to the mediaeval period, but the remedial applicability of the idea was not fully explored until the nineteenth century. Today it is potentially applicable, depending on the facts, in all cases where one person undertakes to act on behalf of another, and has discretion in how the task is done. The bank is such a person . It will have to show that it did not unduly influence its customer if it has "crossed the line" from debtor to fiduciary, and, if it has not, it still may have its transaction struck down as unconscionable. A bank may be liable in damages, as well as for an accounting and as constructive trustee. If it gives "knowing assistance" to a customer who is a fiduciary, and in breach, it may also be liable for the loss caused to the third party.