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5 Client Agreements and Compensatory Damages

From: The Law of Financial Advice, Investment Management, and Trading

Lodewijk van Setten

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved.date: 23 September 2020

Banker-customer contract — Remedies for lenders’ breaches — Regulation of banks — Capital markets — Investment business

This chapter discusses the regulatory framework for the agreement between the investment firm and the client. The terms of the client agreement are the primary source for the investment firm’s private law duties to the investor. To arrive at a set of contractual duties, the client agreement needs to be construed. ‘Construction’, as a concept, may be divided into the process of interpretation of the express terms and the process of implication of terms into an agreement by law, by fact, or based on custom and usage. The chapter first considers the applicable standard of skill and care for client agreements before explaining the regulatory expectations around governance and control of risks arising from the appointment of sub-contractors (outsourcing). It also examines the investment firm’s liability to provide compensation to the investor for losses caused by breach of duty relating to a contract, tort, or equity.

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