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BANKER – CUSTOMER RELATIONSHIP IS THAT OF A CONTRACT

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By the combined effect of the said averments, the respondent maintained a current account with the appellant, a registered commercial bank. The nature of such relationship has been given recognition in plethora of judicial decisions that it involves a specie of contract with special usages with particular reference to monetary or commercial transactions. Consequently, a banker has a duty under its contract with its customer to exercise reasonable care and skills in carrying out its part with regards to transactions in its contract with its customers. The Banker’s duty to exercise reasonable care and skills stretches over the whole range of banking business within the ambit of the contract with the customer. This duty applies to interpreting, ascertaining and acting in accordance with the instruction of the customer.

– Shuaibu JCA. Diamond Bank v. Mocok (2019)

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COURT WILL TAKE JUDICIAL NOTICE OF BANKING GUIDELINES

Indeed, the Rules, regulations and guidelines may be pleaded and where they are not pleaded, the courts may take Judicial Notice of same. See S. 73-75 Evidence Act, 2011 and the Government of Lagos State v. Pastor Karimu and others (2012) 5 NWLR (Pt. 1294) page 620.

— M.A. Danjuma JCA. Folorunsho Ogboja v. Access Bank Plc (CA/AK/38/2013, 18 MAY 2015)

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NATURE OF A BANK AND BANK’S CUSTOMER

per Lord Atkin in JOACHIMSON v. SWISS BANK CORPORATION (1921) 3 KB 110 COURT OF APPEAL where he held: “The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice. The customer on his part undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept.”

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CUSTOMER – BANKER RELATIONSHIP IS CONTRACTUAL

Furthermore, generally, the relationship of a bank customer and a banker is contractual. In other words, a customer to a bank in relation to the business of banking is any person having an account with a bank or for whom a bank has agreed to collect items and includes a bank carrying an account with another bank. – ARIWOOLA J.S.C. Union Bank v. Chimaeze (2014)

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BANK TO INFORM CUSTOMER BEFORE MOVING MONEY FROM ONE ACCOUNT TO ANOTHER

In BRITISH and FRENCH BANK LTD. v. OPALEYE (supra) Mr. Opaleye the customer of the Bank had two accounts at the Bank, one in his name and the other in the name of the firm and he was the sole account holder. The firm account was overdrawn to the extent of ?500 and when a cheques of ?350 was paid into the private account the Bank decided to utilize the money from the private account in order to reduce the overdraft in the firm’s account. The Bank utilized the money from the private account to reduce the overdraft in the firm’s account. Opaleye told the Bank that ?350 less his commission belonged to the stranger whose property he had sold, the Supreme Court held: “I think it can be said with justice that very strongly implied an agreement to keep them separate and distinct, without any right on the part of the Bank to combine them or to transfer assets from one account to the other, at any rate not without reasonable notice of the intention so to do.”

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LIMIT CANNOT BE IMPOSED ON CASH WITHDRAWAL AS IT IS ILLEGAL

The imposition of withdrawable cash limits after collection of the old notes, amount to a scheme to entrap and not allow much of such funds come out of the banking system. My attention has not been drawn to any law that permits a bank not to pay cash to a customer on demand on the ground that the 1st defendant has not been able to print enough new naira notes or that permits the 1st defendant to direct the imposition of limits on the cash to be paid from a customer’s account after deposit of the old naira notes. To the extent that the directive has continued to deprive all persons and the plaintiffs access to a substantial part of their funds in banks inform of cash, it forcefully and illegally interferes with their rights of ownership and use of their said funds. Such restriction on an owner’s right to freely use his or her property is illegal unless provided for by a law.

— E.A. Agim, JSC. AG Kaduna & Ors. v. AG Federation & Ors. (2023) – SC/CV/162/2023

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CONTRACTUAL RELATIONSHIP BETWEEN BANKER AND CUSTOMER CREATES A DUTY – BREACH RESULTS IN NEGLIGENCE

In Diamond Bank Plc. v. Wellcare Alliance Ltd. (2015) LPELR-40762 (CA), the Court held as follows: “I share the re-instatement of the law by my learned brother that the Appellant as a banker to the Respondent owed the Respondent a duty to exercise reasonable care and skill the breach of which entitles the Respondent to claim damages for negligence. It is settled law that the legal relationship between a bank and a customer based on contract is that of a Creditor and Debtor, or Principal and Agent. The creditor/Principal being the customer and the Debtor/agent being the bank. The contractual relationship imposes a duty of care on the Bank the breach of which will impose on the bank a liability of negligence. See Standard Trust Bank Ltd. v. Anumnu (2008) 14 NWLR Pt. 1106 Pg. 125; UBA Plc. v. Godm Shoes Industries (Nig.) Plc. (2011) 8 NWLR Pt. 1250 Pg. 590.”