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Duties of a bank to the customer

Emeka Anaeto

Let’s begin a treatise on basic banker-customer relationship with a peep into the obligations or duties of banks to their customers.

The duties of a bank towards the customer are derived from the contractual agreement entered into when the account was opened.  In other words, the contractual obligation would stem from the content of a document called mandate form which is an integral part of the account opening form every customer fills before he/she becomes a customer of the bank. Take time to read the very many conditions and prescriptions contained in those documents. Most bank customers hardly do this.

Most of the obligations of banks to their customers can be distilled from the celebrated case of Joachimson V. Swiss Bank Corporation (1921).

• The bank should receive on behalf of its customer cash directly into the customer’s account and accept cheques and other negotiable instruments for clearing into the customers’ account.

• The bank should pay or honor cheques and other withdrawals properly authorised by the customer during banking hours at the designated business offices of the bank, or any other agreed location provided there is sufficient funds in the account or agreed overdraft. This also implies the bank should avoid wrongful dishonor of customer’s cheques.

• The bank should give reasonable notice before closing a customer’s account.  Though generally one month is acceptable, it was held to be inadequate for a business with complex banking relationship in Prosperity V. Lloyds Bank (1923). However, some circumstances may force immediate closure where a case of fraud is established.

• The bank is duty bound to inform the customer if his signature has been forged on a cheque or other instrument – Greenwood V. Martins Bank (1933).

• The bank should provide the customer with statements of account regularly for record and reconciliation purpose. They are not supposed to charge for this service as is the case with many banks in Nigeria today.

• The bank should pay agreed interest on deposits and any other agreed returns on financial investments in the account

• The bank is duty bound to ensure that the customer’s money is safe.

• The bank is duty bound to keep the customer’s account and affairs secret in line with the qualified conditions in the legal background in Tournier V. National Provincial and Union Bank of England (1924)

Circumstances when secrecy is vacated

• By express authority of the customer; though in practice, implied authorisation suffices.

• A court order can force a bank to disclose a customer’s bank account details.

• In the interest of the bank e.g by quoting the details of an overdue debt sent to a guarantor for redemption.

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