The contract is saying that you can request a withdrawal at any time. It is totally obvious that the bank can't process a withdrawal if they don't have the money. They could add that clause to the contract, but there would be no point -- everyone understands that already.
I'm sorry, but the contract
must explicitly define such things. I'm among the minority group of libertarians that disagree that fractional reserves are inherently fraudulent - they certainly don't need to be. But the terms should all be explicit, otherwise it's indeed a fraud.
That's a good way to make lawyers rich, but it doesn't actually do anything.
"Implicit contracts" are only tolerable for really obvious things, where no reasonable person would think otherwise (classic example: you invite me for a ride on your boat: there's an implicit agreement that you'll bring me back to the shore, and not order me to leave your property in the middle of the sea)
It's not a bank's job to give its customers an education. If they don't understand how banks work, odds are they don't really want to know and I don't see it being reasonable for a bank to try to educate them. I can't imagine how adding a few more paragraphs of legalese explaining how fractional reserve banking works to their agreements would make any difference and I think it's kind of odd to imagine it would.
In any event, it's not a secret. It's understood by anyone who takes the time to learn it. So it's not fraud. The bank doesn't seek to profit from anyone's lack of understanding how fractional reserve banking works. Nobody would act any differently if they knew and the only people who don't know are those who don't wish to and don't care.
Thank you. It seems that I need to reconsider my position. Up until now I have been considering fractional reserve banking a fraud, and I still think it is a detriment to the society. At the very minimum, bailouts of any kinds of businesses should be expressly forbidden. The Cyprus deal, even as it stands now, still supports Russian oligarchs from my pocket without my approval, and I don't think it is a stable ground to build a society upon.