"The power disparities between a bank and a customer by their very nature and existence impose a duty of trust on the banks. The bank's economic power prevents the customer from being able to deal with the bank as an equal, creates a gap between the customer's bargaining power and that of the bank, and allows the bank to dictate the terms of the engagement without being almost impossible to change them; This is the case in the case of the "ordinary" person, perhaps as opposed to large business owners, large customers of the bank, or customers who are willing to enter into tedious negotiations in order to extract benefits from the bank. The complexity of bank contracts and the difficulty in understanding them have led legislation and case law over the years to reaffirm the bank's obligations of disclosure and loyalty towards its customers and service recipients."
The Supreme Court was also required to consider the scope of the obligations imposed on banks towards borrowers and mortgages in the Martin case (Civil Appeal 8611/06 Bank Hapoalim in Tax Appeal v. Michal Martin (March 2, 2011) (hereinafter: "the Martin case"), in the same matter the Supreme Court unanimously cited the opinion expressed by Dr. Ruth Plato-Shinar in her book Banking Law - The Duty of Banking Trust (2010) (hereinafter: "Plato-Shinar"). There, Dr. Plato-Shinar noted at pages 199-202 that "the duty of disclosure imposed on the bank vis-à-vis the mortgage is a duty of disclosure in the broad sense, which includes several subsidiary duties, including: the duty to disclose data in the narrow sense, relating to data external to the contract; obligation to emphasize substantive matters; the obligation to provide an explanation as to its full meaning, results and implications of the transaction; and the obligation to verify the understanding of the data and explanations provided" (ibid. in paragraph 42 of the judgment)
- Has a bank fulfilled the duty of explanation where the signature of the customer or guarantor is verified by an external lawyer, who confirms that it has given a reasonable explanation to the signatory of the transaction in which it engages and the risks involved? This question was addressed by the Supreme Court in the Martin case, which was mentioned above. In that case, the respondent signed a mortgage deed in front of a lawyer, the purpose of which was to secure the credit in an investigative account - which was managed by the borrower-her husband - without limitation of the amount. At the time of the signing, the investigator's account was in a debt balance and the bank did not disclose this fact to the respondent. It was held that once the respondent knowingly signed the mortgage deed, the rule normally applies according to which agreements must be fulfilled and that: "Generally the law is that a person who signs a document without knowing its contents will not be heard on the grounds that he did not read the document and did not know what he signed and what he undertook. He is presumed to have signed as a sign of his consent, whatever the content of the document" (Civil Appeal 467/64 Switzerland v. Sandor, IsrSC 19(2), 113, 117 (1965)) (ibid.). in paragraph 31 of the judgment). Similarly, other municipal applications 9044/04 Money Israel in the Tax Appeal v. Yitzhak Tzoniashvil(June 24, 2007), were held in paragraph 20 as follows:
"The signatory should be careful, and remember that if he does not read the contract, he will not usually have the defense of deception, as stated above. Deception may only be possible where a party to the contract has done its duty, whether it is a matter of reading the contract or some other obligation, and the mistake was caused by the omission or act of the other party to the contract."
- However, in the Martin case, notwithstanding the prima facie applicability of the presumption deriving from a person's signature on a document, it was determined that there is another factual fact that affects the validity of the deed, namely the bank's failure to disclose the size of the past debt, which has already accumulated into the obligation of the investigative account prior to the respondent's signature on the mortgage deed. With regard to this figure, it was determined that this is a material figure, since a mortgage giver is entitled to know what the debt that he secures is from the mortgage of one of his assets. It was held that the aforesaid applies in particular when the mortgagee is not the debtor and does not have direct access to the transaction data.
- At the same time, the Supreme Court emphasized that this duty of disclosure is a purposeful obligation, and therefore, it was emphasized in paragraph 42 of the judgment that:
"In my opinion, if it had indeed been proven that the Respondent knew about the existence of a debt in the Trust Account, such as the size of the debt (not even exactly); and if it had been proven that the Bank knew this, there would indeed be no reason not to recognize the validity of the mortgage deed. As I noted above, the duty of disclosure is a purposeful obligation.