This time we will deal with a situation that many have surely encountered - a lawsuit by an institutional body (e.g., a bank, municipality, etc.).
It is not uncommon for an ordinary person, someone who has never been to court, to find themselves being sued by a large entity. For example, someone who has signed a guarantee in favor of a third party (in many cases, a family member), can one day be sued by the bank for the debts in the account for which he is the guarantor.
Small letters, big expenses
An initial and fundamental recommendation for anyone sued by an institutional body is to read the fine print in the lawsuit and its appendices.
It should be understood that the claims filed by these entities are usually "serial" claims, and therefore there is a considerable chance of the plaintiff making mistakes, the implications of which can be far-reaching.
Therefore, the defendant's comparative advantage over the institutional body is the ability to go into detail and present it to the court.
For example, if you are sued by a bank, one of the most basic documents that the bank attaches to the lawsuit is the account opening documents for which the lawsuit was filed, and the general terms and conditions for its management. Every person who opens an account signs this document, which regulates many issues (and unfortunately, most account holders do not read it).
Jurisdiction - Where should the lawsuit be conducted?
One of the standard clauses in these agreements is a "jurisdiction" clause that determines, among other things, which court is competent to hear the claim.
This section states that the exclusive place of jurisdiction (i.e., the city where the court where the dispute will be heard is located) is the court closest to the branch where the account is maintained. Hence, if The account If the matter in dispute is located in Jerusalem - then the court authorized to hear the dispute is the court in Jerusalem, and so on.
And yet, despite the stipulation that the banks themselves include in the agreements - it turns out that when the banks file a lawsuit, they often do so based on the location of the law firm representing them, and not according to the terms they themselves set.
In one of the lawsuits we handled, it was about an account in a bank branch in Jerusalem, account holders who live in Jerusalem and an Arab who lives in Jerusalem. In other words, all the connections related to the lawsuit exist in Jerusalem. However, and despite the account opening agreement and the general terms and conditions within it, the bank filed the lawsuit in the court in Beersheba, forcing our client, the defendant, to set foot in the southern city. In this case, we filed a request to transfer the venue of the hearing to Jerusalem, given the conditions set forth in the law, but beyond that - given the agreement that the plaintiff himself drafted. Of course, our request was accepted and the lawsuit was transferred to Jerusalem.
In this way, we saved our client significant legal expenses, and we also "earned points" in the fight against the bank. In such a situation, it is possible and even necessary to demand expenses from the other party, which forced the defendant to invest a lot of effort not only in writing the request to transfer the venue of the hearing, but also in actually submitting it to the distant court.
Limited and unlimited guarantees
Another issue worth checking is the amounts of the debts. Often, and especially when it comes to guarantors, letters are sent from the bank and/or the local authority based on computer output. That is, the defendant accepts the claim for an amount that sometimes has no connection to the amounts for which the defendant signed as a guarantor.
It is important to distinguish between guarantees limited in amount and unlimited guarantees. Sometimes a situation arises in which a guarantor signs a guarantee limited in amount (i.e., he can only be sued for debts in the account up to the amount of the guarantee), but the claiming institutional body seeks to charge him for the entire amount of the debt in the account, without limiting the amount of the claim to the amount of the guarantee.
Such is the case in which we represented a client of ours, a guarantor for an account that was in debt. Even before the lawsuit was filed, the bank sent the client a warning letter stating that he was required to pay the entire amount of the debt in the debtor's account. From an examination of the guarantee documents that our client signed, we discovered that his guarantee was limited to an amount lower than the amount of the debts in the account. One of the first actions we took in the case was to get the plaintiff to admit to the court that our client's liability was only up to the amount of the guarantee he signed, thereby narrowing the boundaries of the dispute and the risk that our client faced.
Charge for interest on the guarantee
Another aspect worth considering in this context is the interest and linkage that apply to the account, as opposed to those that apply to the guarantee.
Often, there are differences between the interest rates that the account holder bears if the account is in a debit balance, compared to the interest that the guarantor must bear if his guarantee is activated. In such a case, the relevant document is the "guarantee letter" signed by the guarantor, which details, among other things, the interest rates and/or linkages that apply to the guarantee. This point may also save you a lot of money, and here too - the small details are what matter.
In conclusion, even in a situation where you are being sued by a large and daunting entity, it is possible to accumulate significant points along the way without the court having to consider the merits of the dispute. This process may significantly assist in reaching a compromise between the parties, and in the quick and efficient conclusion of the proceedings.
more Ruth Spitzer, fromWolfson Weinstein & Co.', specializes in the fields of law Commercial Civil, Insolvency and litigation.
Join the Haredim 10 Facebook page >>
Join the X page of Haredim 10 >>
Want more news, videos and stories? Join the Haredim 10 WhatsApp channel >>
