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

Dictum

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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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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