Bankers Dutiesand Rights

under common law

to follow customer's mandate

mandate = instruction

must follow until revoke

to honour cheques as Paying Banker

follow mandate and make paymentprovided

cheque properly drawn

the customer has not countermand payment

no legal bars to payment

cheque presented during banking hours at branchwhere account is kept

insufficient funds

pay and claim later

important to honour cheques

if fail, customer can sue for breach of contract

countermand of payment

section 75 BEA

banker's duty and authority end

given written instructions

banker not liable if payment made before instructions received

send countermand to branch where account is kept

bring countermand to banker's notice; otherwise no liable if pay out

collect cheques as collecting banker

collect cheques for customer

present to paying banker

credit to customer's acc

paying banker

agent for customer in making payment

must exercise due care and skill

need to make enquires if bank suspect that another agent acting against customer's interest

collecting banker

agent for customer when collecting cheques

when presenting cheque to paying banker and collect payment:must exercise reasonable care and diligence

section 47 BA

Bank - legal obligation to keep information of customer secret

case law: Tournier v National Provincial Bank

held: informationthat must be kept secret

state of client's account

all transactions & securities give

information received about client

obligation extends to even when customer's account closed

3rd Schedule BA

Part I: Futher disclosure not prohibited

Part II: Futher disclosure prohibited

reasonable care and skill in drawing cheques

maintaining sufficient funds to meet liability of cheques

keep cheque book securely

give proper notice of countermand

keep PIN secret

Banker can charge for service

express agreement

express term that commission will be charged

implied from course of dealing

right to commission implied from previous dealings

case law: spencer v wakefield

where it is reasonable to charge a commission

charge interest on loans

when makes loan/ advances to customer

usually includes clause on right to vary interest

to repayment of loans

right to repayment

may include penalty clauses on late payment

to use C's money that is deposited provided

money returned when C's withdraws

honour cheques issused by C

expect due care from C

when drawing cheques

maintaining cheque book

PIN numbers

to exercise lien over customer's property

lien - right to possession of property of another until repayment

B has lien over securities deposited with it in ordinary course of business

no lien over

title deeds (unless express agreement)

jewellery in safe deposit box

C dies

B receives notice

can set off

claim balance from personal representative

mental incapacity

bankruptcy/ winding up

notice

can set off

declaration

claim against official assignee

2 current accounts

bank not obliged to honour cheques on acc in debit by transferring from account in credit

unless agreed

1 current & 1 saving account

usual practice: B will set off

1 loan & 1 current account

cannot set off money in current account

combine/ set off accounts

set off only when accounts stopped

no set off

against C's future liabilities

express/ implied agreement against set off

account contain trust funds

if account in different names