The relationship of banker and customer is that of agent and principal: ‘Primarily, the relationship between a banker and customer is that of debtor and creditor. But quoad the drawing and payment of the customer’s cheques as against the money of the customer’s in the banker’s hands the relationship is that of principal and agent.’ and ‘In my judgment it is an implied term of the contract between the bank and its customer that the bank will observe reasonable skill and care in and about executing the customer’s orders. Moreover, notwithstanding what was said in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 at 107, a banker may in a case such as the present be sued in tort as well as contract: see Midland Bank v Hett Stubbs and Kemp [1979] Ch 384. But the duties in tort and contract are coextensive, and in the context of the present case nothing turns on the question whether the case is approached in contract or tort.’
. . And ‘it is right to say, that trust, not distrust, is also the basis of a bank’s dealings with its customers. And full weight must be given to this consideration before one is entitled, in a given case, to conclude that the banker had reasonable grounds for thinking that the order was part of a fraudulent scheme.’
Judges:
Steyn J
Citations:
[1992] 4 All ER 363
Jurisdiction:
England and Wales
Citing:
Cited – Westminster Bank Ltd v Hilton HL 1926
As against the money of the customer’s in the banker’s hands the relationship between banker and customer is that of principal and agent.
Lord Atkinson said: ‘It is well established that the normal relation between a banker and his customer . .
Cited – Lipkin Gorman (a Firm) v Karpnale Ltd 1987
A partner in the plaintiff firm of solicitors stole money from them and spent it gambling in the defendant’s casino. The plaintiff cought to recover the money from the defendant, saying that as a gambling debt, no consideration had been given. They . .
Cited by:
Cited – Sandra Estelle Fielding v The Royal Bank of Scotland Plc CA 11-Feb-2004
The husband and wife had signed a bank mandate allowing the bank to act upon the authorisation of either of them. The wife complained that the bank should not be able to recover from her any sums expended by the husband.
Held: The mandate . .
Cited – Shah and Another v HSBC Private Bank (UK) Ltd QBD 26-Jan-2009
The claimants sought damages after delays by the bank in processing transfer requests. The bank said that the delays were made pending reports of suspected criminal activity. The bank’s delay had stigmatised the claimant causing further losses. The . .
Cited – Shah and Another v HSBC Private Bank (UK) Ltd QBD 26-Jan-2009
The claimants sought damages after delays by the bank in processing transfer requests. The bank said that the delays were made pending reports of suspected criminal activity. The bank’s delay had stigmatised the claimant causing further losses. The . .
Cited – JP Morgan Chase Bank Na v The Federal Republic of Nigeria CA 8-Oct-2019
. .
Cited – Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd SC 30-Oct-2019
. .
Lists of cited by and citing cases may be incomplete.
Banking
Updated: 24 April 2022; Ref: scu.194777