## Facts

- A. & G. Advanced Systems for Driving Instructors Ltd. (A&G) maintained a bank account at Bank Leumi of Israel Ltd., Rehovot Branch (the bank).
- A&G wrote 14 checks that, if paid, would have overdrawn the account beyond its overdraft limit.
- The bank refused to honor the 14 checks.
- A&G sued the bank, claiming there was an agreement permitting A&G to exceed the overdraft limit.
- A&G also alleged the bank’s refusals were made in bad faith to interfere with a transaction that would have required A&G to open an account at another bank.
- The bank presented evidence that it had lowered A&G’s overdraft limit, that A&G knew the limit had been lowered, and that no agreement allowed A&G to exceed the applicable limit.
- The district court ruled in favor of the bank.
- A&G sought Supreme Court review via a request for permission to appeal (Permission for CA 9374/04) in 2004.

## Issues

1. Whether the bank was obligated—by agreement or by the parties’ dealings—to honor checks that would exceed A&G’s overdraft limit.
2. Whether the bank effectively reduced A&G’s overdraft limit and whether A&G had notice of the reduction at the time the checks were presented.
3. Whether the refusal to honor the checks could constitute bad-faith conduct intended to interfere with A&G’s outside transaction, and what proof would be required on causation and damages.
4. Whether the Supreme Court should grant permission to appeal from the district court’s judgment in favor of the bank.

## Decision

- The district court entered judgment for Bank Leumi.
- A&G filed a request for permission to appeal to the Supreme Court of Israel (Permission for CA 9374/04 (2004)).
- On the publicly available record described above, the Supreme Court’s final disposition and reasoning are not available.

## Legal Principles

- A bank’s duty to honor checks generally depends on the customer’s account terms and any approved overdraft facility; absent a binding commitment, the bank may refuse items that exceed the authorized limit.
- A claimed overdraft arrangement may be analyzed as a contractual undertaking; the customer bears the burden to show the bank committed to pay beyond the stated limit.
- A bank’s ability to change an overdraft limit commonly turns on contractual authority to change terms and whether the customer received notice sufficient to defeat reliance on a prior limit.
- Allegations that a bank exercised contractual rights for an improper purpose raise questions of good-faith performance and proof connecting the refusal to a legally compensable loss.

## Conclusion

A&G challenged Bank Leumi’s refusal to honor 14 checks that would have exceeded the account’s overdraft limit, arguing an agreement allowed overruns and that the refusals were made in bad faith to obstruct an outside transaction; the bank responded that it had lowered the limit with A&G’s knowledge and that no such agreement existed, the district court ruled for the bank, and A&G sought Supreme Court review through a request for permission to appeal (Permission for CA 9374/04 (2004)).


A. & G. Advanced Systems for Driving Instructors Ltd. v. Bank Leumi of Israel Ltd. Rehovot Branch, Permission for CA 9374/04 (2004)