Lord Justice Floyd said: ‘A customer gives its bank (‘the remitting bank’) instructions to pay one of its suppliers using the clearing houses automated payment system (‘CHAPS’). The instructions include the correct name of the supplier whom the customer wishes to pay. However, the instructions also include numerical data (account number and sort code) which the customer believes, wrongly, to be the bank account of the supplier at another bank (‘the receiving bank’). In fact, although there is an account corresponding to those numerical data at the receiving bank, it is in the name of, and belongs to, a third party, apparently unconnected with the supplier or the customer. The receiving bank does not check the name on the account to confirm that it corresponds to the name of the supplier, because it is not banking practice to do so. Once the amount of the transfer is credited to the third party’s account, it is withdrawn. Is the remitting bank entitled in these circumstances to debit the customer’s account with the amount transferred? That is the issue which arises on this appeal. It raises a short point of construction of the instructions which the customer gave to the remitting bank on the bank’s standard transfer form.’
Judges:
Dyson L MR, Tomlinson, Floyd LJJ
Citations:
[2014] EWCA Civ 1107, [2014] WLR(D) 369, [2014] Bus LR 1167
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – Lehman Brothers International (Europe) v Exotix Partners Llp ChD 9-Sep-2019
The parties had contracted to trade global depository notes issued by the Peruvian government. Each made mistakes as to their true value, thinking them scraps worth a few thousand dollars, whereas their true value was over $8m. On the defendant . .
Lists of cited by and citing cases may be incomplete.
Banking
Updated: 13 September 2022; Ref: scu.535460
