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The Business Law Committee has recently undertaken a review of the standard terms and conditions of several of the commercial banks with whom practitioners may hold client and office accounts. These terms and conditions govern, among other things, the relationship between the bank and the practitioner, where the practitioner requests the bank to act on instructions sent by fax or electronically.

The Business Law Committee would like to draw the attention of practitioners to the fact that certain of these terms and conditions incorporate what the committee considers to be onerous indemnities deemed to be given by the practitioner in favour of the bank.

As drafted, some of the indemnities could cover a situation where the bank, acting on instructions from the practitioner, suffers a loss through no fault whatsoever of the practitioner or, indeed, in some cases through a fault of the bank solely.

Practitioners may consider the indemnities contained in many of the said terms and conditions unreasonable, as going beyond what a bank could reasonably require of them.

In particular, the Business Law Committee is concerned at:

• The extent of the indemnities sought,
• The failure by the banks in some instances to highlight the indemnity provisions, and
• The provision in certain of the banks’ terms and conditions whereby the bank may automatically debit the customer’s account in the amount of any claim covered by the indemnity.

The Business Law Committee conveyed its views to the Irish Banking Federation; however, the Irish Banking Federation felt it would not be appropriate for it to recommend a standardised approach to its members. They did, however, agree to request that their members would highlight the indemnity provisions where possible.

It is recommended that practitioners review the terms and conditions of their practice bank, and in particular the indemnities incorporated therein. Practitioners are urged to exercise caution in agreeing to engage with their bank on the basis of standard terms and conditions and should, in particular, review the indemnities included in those terms and conditions. Where the indemnities are unreasonable, practitioners should raise their concerns directly with their bank.