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Practice areas | Drafting and analysis of contractual documents related to banking and finance

Drafting and analysis of contractual documents related to banking and finance

The concept of a general banking contract, which would be a kind of framework contract applicable to any relationship between a client and his bank, is not recognized under Swiss law.

In the absence of a general banking contract, the contractual relationship between the bank and its client is subject to the conclusion of a specific written contract precisely defining their contractual relationship. This contract is generally supplemented by a reference to the bank's general terms and conditions.
The contractual relationship between the client and his bank is mainly governed by the provisions applicable to the mandate, the characteristic elements which are more or less largely expressed according to the services that the client requests from his bank.

The characteristic elements of the mandate that permeate all banking relationships imply that the bank must be accountable for its activity. In order to fulfil this obligation, the bank must provide its client with sufficient and understandable information. It must mention all the elements enabling the client to understand the transactions carried out and to verify that the bank has complied with the instructions given to it. If necessary, the client must be informed of any errors made by the bank.

The law imposes increased disclosure requirements when the bank offers financial products to its client. These obligations are mainly motivated by the need to protect the consumer of financial products and the desire to make financial activities, understood in a broad sense, more transparent.

Thus, financial actors must, for certain products that they promote, provide a prospectus detailing a certain amount of information that must be made available to the consumer. From 1st January 2020, the legislation will reinforce this information requirement by categorising and specifying the type and extent of information to be sent to the client. Thus, some will continue to be the subject of a prospectus while others, now mandatory, will have to be communicated in writing at the beginning of the contractual relationship.
All these documents are important because they delimit the obligations of the service provider, and therefore his/her responsibility towards the client. Furthermore, these documents are also subjected to FINMA audit and therefore, there are possible consequences in the event of non-compliance to FINMA requirements.

Watt law supports and advises you on contractual aspects related to banking and finance.