THE COPPERBELT UNIVERSITY

SCHOOL OF BUSINESS
NAME : LUTENTA BRIGHT

SIN : 19134035

PROGRAMME : BACHELOR OF SCIENCE IN BANKING & FINANCE

COURSE : BANKING LAW AND PRACTICE

CODE : BF 390

LECTURER : PROF. HENRY AONGOLA

TASK : ASSIGHNMENT 2

DUE DATE : 10 JANUARY 2022

 QUESTION ONE

According to the banking and services act of 1994, the words Bank or Banker are restricted to
institutions which are licensed to by the bank of Zambia to carry out banking activities in the
Zambian context. A Banks customer is a person who has a contractual relationship with the bank
or banker. The relationship which subsists between a banker and a customer is basically
contractual and fundamentally that of the debtor and creditor. It comprises of general and
special contracts arising from requirements of the business of banking. These relationships make
a bank to be versatile creating various rights and duties of banker and customer. According to
Lord Atkin in the case of JOACHIMSON V SWISS BANK CORPORATION (1921), the bank
undertakes to receive money and pay on demand. This is the case that laid down duties of a
banker to the customer. The summary of the case is outlined below.

CASE: JOACHMISON V SWISS BANK CORPORATION (1921)

Siefreed Joachmison his brother and L.E Markx entered a business partnership and jointly
opened a bank account with the Swiss Bank Corporation. On 19 August 1914 Siefreed
Joachimison died, three days later Jacob Joachmison returned to Germany due to World War 1
leading to the dormancy of the account. After the war L.E Markx sought repayment of the funds
held in their bank account. The bank refused to repay the sums in the account arguing that there
was no demand for repayment.

ISSUES: was the bank legally to refuse the repayment of the funds in the account to the
complainant?

HOLDING: yes, the bank was in order because the claim was not statute barred. Until a
customer demanded repayment from the bank, the debt was not due and payable, and thus
limitation periods could not run. Bankes LJ held.

BANKERS DUTIES TO THE CUSTOMER.

Even though the primary relationship between a banker and his/her customer is that of debtor
and creditor or vice versa, however the special features of this relationship, impose the following
obligations on the Banker.

 Duty to honor cheques-this is one of the important duties of a banker arising from the
fact (ESTABLISHED IN FOLEY V HILL 1848) that the banker/customer relationship is

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 essentially that of debtor and creditor. The banker is under a statutory obligation to
honour his customers cheques in due course to the extent that that the account is in credit
or upon an agreed overdraft.

 Duty not to pay without authority- the bank must not authorize any payment without the
customers’ duly authorization. The case of (B LIGGET (LIVERPOOL) LIMITED V

BARCLAYS BANK LIMITED 1928) illustrates the duty to follow instructions and the
risks the bank can encounter if they don’t abide by the customers authority

 Duty to act on notice of death- the banker must act on a reliable report of the death of
their customer with full proof of dearth before revoking its duty to the customer.

 Duty to tell customers of forgery- the banker has a duty of informing their customer
about any form of suspected fraud to forestall forgery or any other unauthorized dealings
by third parties. GREENWOOD V. MARTINS BANK LTD (19342), further illustrates a
precedence of this duty

 Duty to collect deposits- the banker should collect all correctly dawn cheques, valuables,
and the likes from, for and on behalf of the customer. In DIKE V ACB LTD, the bank
was compelled to collect deposits from the customer being its duty.

 Duty to inform the customer on the state of his account- the bank must provide a
reliable statement of the customer’s account regularly so as that the customer may have
the opportunity to reconcile with his account.

 Duty of secrecy- the Banker has a duty observe secrecy in respect to the customers
financial affairs except in instances where exceptions take. In (TOURNIER V
NATIONAL PROVINCIAL AND UNION BANK OF ENGLAND ), The banker disclosed
certain confidential information relating to the customer’s account and creditworthiness.
The customers employers acted on the information and refused to renew his employment.

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 The court held that the defendant bank had failed in their duty of secrecy and were liable
to pay damages.

 Duty to take reasonable care- the Banker has a duty to act with reasonable care and
skill to ensure that there is no misappropriation of the customer activities. In WOODS V
MARTINS BANK, imprudent advice given by the manager of the bank to the customer
grounded liability.

 Duty to ensure payment to the right person-banker has the duty to pay out cheques to the
true owner and to no one else.

 Abiding by the customers written mandate concerning his account-a banker must
observe the customers mandate on all activities drawn on his account. It shouldn’t carry
out an activity which is not approved by the customer.

 Giving reasonable notice before closing the customer’s account- a banker must provide
a reasonable notice on the customer’s account closure in good time.

Given the bankers obligations to the customer, it is very important for the banker to implement
its duties with much care and skill to build strong, heathy, trustworthy, reliable long-term
standing and profitable relationship between them and their customers.

QUESTION TWO

It has been a worldwide norm that in cases dealing with a banker customer information, mostly
public figures, third parties always tend to request from bankers to reveal the banking details of
their customers. According to the (TOURNIER V NATION PROVINCIAL UNION BANK OF

ENGLAND 1923) clarified the legal position of a banker regarding the bank secrecy rule and
stated that the Bank Secrecy rule ensures that a bankers customer details and business activities
must be always kept secure and confidential. The Tournier case was concerned about bank
confidentiality commonly known as Bank Secrecy. In giving judgment, Atkins LJ in answering
the question regarding the extent of information covered by the obligation of secrecy held that
the bank secrecy rule extends beyond the account that is held by the customer.

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 This rule applies before during and after termination of the banker customer relationship.
However, the bank secrecy rule is not Absolute. There are common and statutory exceptions to
this rule. Some of these exceptions as stated In the Tournier case are:

1. When then law requests such disclosures to be made.

2. When practices and usages amongst the banker permits such disclosure.

A banker is justified in disclosing information about his customers account on reasonable

occasions only as discussed below:

Duty to the public to disclose

This exception often takes place when a customer of a bank poses danger to the public through
his/her conduct, such as criminal activities. In such a case the bankers public duty outweighs that
of private duty as held in the Tournier case.

Disclosure in the bank’s interests

A bank can disclose information in its interests under certain circumstances. For example, when
a bank is under legal proceedings against their own customer, the bank is left with no choice but
to disclose the customers information. The case of DENSAM V C YWIINAT illustrates the
instances where a bank protects its interests by ceding its claim against its own customer to a
third party.

Disclosure with the customer’s consent

A customer can expressly or impliedly consent to their bank information being disclosed by its
bank. The Tournier case provided an example of where a customer would authorize a reference
to his bank account.

Disclosure of information required by law

A banker is under statutory obligations to disclose information of the customer account when the
law specifically requires him to do so. Such a disclosure can take place to meet statutory
requirements such as the Income Tax Act of 1961, The Companies Act of 1961, By Order of
The Court Under the Banks Books Evidence Act of 1891, The Banking Regulation Act of
1949 as well as Disclosure to The Police under the Criminal Procedure Code.

In conclusion, the banking secrecy rule is very important in the banking sector and forms an
integral part of all bank customer-relationships. Nevertheless, the rule is not Absolute and the

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exceptions to the secrecy rule were set out by common law exceptions as mentioned in the
Tournier Case.

BIBLIOGRAPHY

Case Law

B LIGGET (LIVERPOOL) LIMITED V BARCLAYS BANK LIMITED 1928

DENSAM V CYWIINAT

FOLEY V HILL 1848

GREENWOOD V. MARTINS BANK LTD (1932)

JOACHIMSON V SWISS BANK CORPORATION (1921)

TOURNIER V NATIONAL PROVINCIAL AND UNION BANK OF ENGLAND )

WOODS V MARTINS BANK

Books

Banking Law and Practice BF 390 Student Handbook. (Lecturer Mwansa C. Mulenga,
Copperbelt University).

Banking Law and Practice Module 3 the institute of company secretaries of India

BF 130 Banking Operations, Lending, and International Business (Lecturer Dr. S. C. Mpembele,
The Copperbelt University).

Henry Aongola 9LLB, AHCZ, LLM, PHD ©), Lecturer the Copperbelt University, Banking
Law and Practice Lecture notes units 4,5.8 and 13.

Articles

Catherine Smith The Bankers Duty of Secrecy 1979

Legislation

The Constitution of The Republic of Zambia 1996

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