Research On Collateral Obligations Of Banks In Personal Financial Contracts

China’s banking personal financial business grows rapidly and plays a huge role in the financial markets. At the same time, the personal financial market exposes many legal issues. The position of the banks and the customers in financial contracts seems equitable but inequitable essentially. The legal nature of the contract is not clear, so the rights and obligations of both parties are not clear and the bank frequently abuses its dominant position to damage the interests of the customers. Meanwhile, because the resolution mechanism of financial dispute is not perfect and the afterwards relief is scarce, the legitimate interests of customers can not be protected by the law fully. And the courts guided by the principle of "freedom of contract" tend to give a judgment that the customers "caveat emptor" and the bank "seller no responsibility", according to the terms of the contract and because of the copy and the signature of the customer. The loss of customers has not been compensated. The court only values the obligations of the contract, completely ignoring the collateral obligations of the bank. It makes the problem worse. It disappoints the customers of the bank and affects the long-term development of China’s banking financial services and financial markets. So, this paper studies on the collateral obligations of banks in personal finance contracts, discussing the theoretical basis, specific contents, the breach and the legal liability of collateral obligation of banks in the personal financial contracts, to redress the legal status of the bank and the customer, to strengthen the legal protection of financial consumers, to broaden the thinking of judges in resolving the financial disputes, to promote the healthy development of banking financial services and achieve the social justice.The collateral obligations of the bank in the personal financial contracts are the subordinate obligations which are produced according to the principle of good faith or on the basis of the nature of the financial transactions or upon request of the trade practices, in order to achieve the purpose of the contract successfully and protect the interests of the parties completely. The collateral obligations of the bank contain the obligations produced during the phrase of the establishment and the performance of the contract and after the termination of the contract. Compared with the main obligations of the bank, it is subsidiary, supplementary, extensiveness and uncertain and it is a special kind of legal obligations. The prominent feature of the personal financial contract determines the main types of the collateral obligations of the bank, including the obligation to provide information, the suitability obligations, the duty of loyalty and care and so on. The relationship between the bank and the customer is a nameless contract based on trust and also a consumer contract. Therefore, the subject mainly refers to the banks who assume the collateral obligations in the personal financial contract. Banks to take collateral obligation is in favor to correct the information asymmetry and protect customers’ special trust to the banks. It is important to ensure the security, improve transaction efficiency and achieve social justice.To balance the status of the banks and customers of the information, the law should require banks to bear the obligation to provide the information during the phrase of the establishment and the performance of the contract and after the termination of the contract. Depending on the subject of the information, the author expounds the product description obligations, the risk disclosure obligation and the obligation to provide additional information. The way to fulfill the obligation of providing the information is varied, which can be written, oral or in other forms, which can be active or passive, which can be regular or irregular, which can be publicly or non-publicly. The information provided by the banks should meet certain criteria, including the authenticity, accuracy, completeness, timeliness, relevance, clarity and convenience and so on. There may be some conflict between the bank’s obligation to provide information and the protection of the trade secrets of the bank and we should protect customers’ right to know. But that does not mean the bank should provide all the information the customer wants. The customers’ right to the information must be limited within a reasonable range. The banks simply provide the important information.The personal financial products are designed by financial experts, sundry, complicated and there is a large gap between the levels of risk. The personal financial contract is a form contract, filled with many professional terms. The products are sold by the professional managers and the general customers judge the risk and choose their own financial products based on the interpretation, description, promotion, commitments of the professional managers. Therefore, in the sales process of the financial products, the bank should bear the suitability obligation, to assess the client’s risk judgment and risk tolerance, to clear the product’s risk level. The bank should ensure the appropriate professionals sell suitable financial products to fit customers.The customer is willing to build financial relationships with banks because he trusts the bank and he believes the bank has the appropriate professional service capabilities and it can help them to achieve financial goals. The customers have reason to expect the bank to pay close attention to their interests and the bank will maximize their interests. Therefore, once the bank signed a management contract with the customer, it means that it accepts the customer’s trust and is willing to work hard to maximize the interests of customers and take the appropriate fiduciary obligations. This fiduciary duty requires banks not only to strictly fulfill the obligations agreed in the contract, but also to assume the duty of loyal and duty.In the dispute between the bank and the customer, the bank often breaches the collateral obligations of the personal financial contract, which is caused by the imperfect legal norms and the restricted judge’s discretion. The breach of the collateral obligation of the personal financial contract will have an impact on the performance of the contract. Under normal circumstances it would not cause the personal financial contracts invalid, but if there is a fraud, the customer can withdraw from the contract.The bank should bear some civil liability if it breaches the collateral obligation. If the bank violates the collateral obligations in the contracting phase, it should bear the responsibility of culpa and the culpa is a sort of tort liability. If the bank violates the collateral obligations in the performance of the contract, it should bear the responsibility for breach of the contract generally and under special circumstances it should bear the tort liability upon request of the customer. If the bank violates the collateral obligations after the termination of the contract, it should bear the after contractual liability, may be breach of contract or the tort liability.The civil liability of the bank should meet four elements. The first one is the behavior element. The bank made a conduct of breach. The second one is the result element. The conduct of the bank caused the damage to the customer. The third one is the causal element. There is a causal relationship between the conduct and the damage. Because of the unequal status and the different capability of proof, the presumption rule should be adopted when identify causality. The last one is the subjective element. It depends on the specific conduct of the bank, if it breaches the contract, the principle of no-fault liability is applied, if it is tort, the principle of fault liability is applied.The way to assume the civil liability is varied. Pay for the damage is the most important way and it is not restricted by the foreseeable rules and the bank should pay for the actual loss of customers due to their behavior. Whether banks bear liability for spiritual damages is determined by the nature of the liability. The banks do not have to assume liability for spiritual damages if the responsibility is for breach of the contract and the banks have to assume liability for spiritual damages if the responsibility is the tort liability. The customers can require the bank to continue to fulfill the financial contract only when the violation of the bank of the collateral obligation is an incomplete performance and the correction is possible and meaning. In general, when the bank violates the collateral obligation, the customer can not cancel the contract.