CAGING COMMERCIAL CUSTOMS, USAGES AND PRACTICES IN THE CONFIRMATION AND PAYMENT

OF THIRD PARTY CHEQUES: AN ANALYSIS OF THE HIGH COURT DECISION IN THE CASE OF
AKWASI BOAKYE OSEI V. STANDARD CHARTERED BANK

Clement Kojo Akapame

Abstract

Customs and industry practices are central to the development of Commercial Law. The development
of the banker-customer relationship is steeped in the -customs, usages and practices of the money
lenders in the medieval period. Since the development of the lex mercatoria, commercial transactions
have relied heavily on customs, usages and industry practices as a source of Commercial Law. Also,
these customs, usages and industry practices have over the years become an immutable source of
Commercial Law. Similarly, customs, usages and industry practice have become benchmarks for
judicial decision-making, and, to some extent, legislative interventions.

In recent times, with the advent of, and wide usage of mobile telephony services, Commercial Banks
have resorted to the use of telephone calls or short messaging system (SMS) to confirm cheques
before making payments. This practice by the banks is also meant to insulate banks and customers
against fraud by third parties.

In the recent High Court decision in Akwasi Boakye Osei v. Standard Chartered Bank1, the courts
rejected this industry practice of using telephone calls to confirm third party cheques before effecting
payment. This article interrogates the impact of this decision on the banking industry and the
development of banking customs and practices. Some banks in the light of the decision of the High
Court are expressly informing customers on non-liability that will arise in the event of the payment of
third party cheques without confirmation.


BSc Admin (Banking and Finance), LLB (Ghana), LLM (Michigan)
1
Suit No: AB 129/2012, 11th December 2014, The High Court of Justice Ghana Automated Court, before his
Lordship Justice K.A Ofori-Atta

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Introduction

The development and growth of a number of commercial activities have been significantly
influenced by customs, usages and practices. The customs, usages and practices of the medieval
merchants are the bedrock of Commercial Law. Taking this into account, a use or custom, as a
source of Commercial Law generally and as it relates to banking specifically, can be viewed as a
commercial practice, where such use or custom is effective, performed repeatedly, and can be
regarded as having some binding force in the absence of an express contractual agreement to that
effect.

The development of customs and commercial practices allowed merchants to create rules that
were more adaptable to various transactions that were outside the orthodox commercial
legislative contemplation. Further, customs, usages and industry practice have become
benchmarks for judicial decision-making, and, to some significant extent, legislative interventions.
The Uniform Commercial Code of the United States (UCC) for instance, has underlying policy
objectives that guides the construction of its provisions.2 These policy objectives of the Code
attempt not only to simplify, clarify and modernize the law governing commercial transactions3
but also to permit the continued expansion of commercial practices through custom, usage, and
agreement of merchants.4In suggesting that these policy objectives gave life to the UCC,
philosopher and drafter of the UCC Karl Llewellyn delivered himself as follows:

“Thus it was an imperative of popular rule that commercial custom should, in case of conflict,
take precedence over statutory provisions, for commercial custom represented the will of the
Volk: The true importance of customary law in our age, with its orgy of statute-making,
becomes apparent, when it is necessary to oppose an altered will of the Volk to the inflexible
will of the legislator. Custom without the power of derogation is meaningless…Unconditional
free play for custom is a cardinal point for the desired new phase of commercial law”5

The centrality of the banking business in the economic development of a country cannot be over-
emphasized. Over the years, the banking sector in Ghana has witnessed growth in the number of

2
Section 1-103(a) Uniform Commercial Code 1962 (Act 174)
3
See U.C.C. S 1-103(a) (2002).
4
See Ibid
5
K. Llewellyn, The Common Law Tradition (1960) 122 at pp 64 [quoting Goldschmidt, Preface to Kritik des
Entwurfs eines Handelsgesetzbuchs, 4 KRITISCHE ZEITSCHRIFT F.D. GESAMMTE RECHTSWISSENSCHAFT
(1857) 289

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institutions providing banking business and the variety of services and products designed to satisfy
the needs of their customers6. The financial intermediation role played by banks makes financial
institutions vital not only to commercial business community but the entire economy
infrastructure; formal or informal, domestic or otherwise.

Banking business is an evolving process of interaction and reciprocity which is simultaneously

facilitated by and leads to an evolving system of banking. In that sense, the business of banking
has evolved from its traditional forms of taking deposits and making payments on the instructions
of their customers to encompass a multi-functional role which involves the provision of various
types of services and products. This is however not to suggest an absence of statutory incursions
into regulating such activities. Yet is worth noting that such statutory inroads are often not only
belated but also largely a ‘legislative transcription’ of the ‘made-up’ practice or customs of banking
that have come to freely crystallise through industry interactions. A reading of the Specialized
Deposit Taking Institution Bill, the Depositor’s Bill and the Ghana Deposit Protection Bill which are
currently before Parliament shows clearly that the law is playing a sort of “catch up” with already
evolved banking practices. Ghana’s current Banking Act was passed in 2004 and amended in 2007.
Now the regulator seeks to replace the entire Act with the new bills in parliament. Very few of our
statutes have seen such relatively rapid legislative interventions.

This evolution of banking business beyond its traditional conceptions interlaced with the
accompanying development in information technology has radically changed the historical scope
of banking business and the relationship of the bank and the customer and perhaps further
complicated that relationship beyond the narrow limits of what the current legal framework
contemplates. In the light of the extensive and varied nature of modern banking business, it is
important that legislative regulation as well as judicial decision-making as regards the duties of the
banks do not obstruct but rather complement commercial innovations.

In the recent Ghanaian case of Akwasi Boakye Osei v. Standard Chartered Bank7, the defendant
drawee-bank had dishonoured cheques drawn on it for the benefit third party payee because the
bank had been unable to obtain a telephonic confirmation mandate of the customer-plaintiff.

6
Section 11 of the Banking Act 2004 (ACT 673) as amended which deals with the permissible activities of
banks recognizes that banking Services /needs of customers keep changing with time. After setting out a
long list of permissible activities 11(1) (p) reads “any other services as the Bank of Ghana may determine”
www.bog.gov.gh Current Data From Bank Of Ghana (Including Microfinances)
7
Supra

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The facts and decision of the learned trial in the case as relevant to the discussion and purpose of
this paper are as follows:

The plaintiff, a customer of with accounts at the Osu and Madina branches of the defendant bank-
Standard Chartered Bank, issued five (5) third party cheques to institutional payees drawn on the
defendant bank. Two of cheques were issued in favour of two (2) religious institutions. The
accounts of the plaintiff were at all times in credit. With specific reference to the two (2) cheques
issued to the religious institutions, the plaintiff pleaded that the defendant did not honour the
cheques because “the necessary confirmation from the plaintiff could not be obtained as attempts
to reach him on his phone proved unsuccessful”

The cheques issued to the religious institutions and drawn on the defendant bank were
dishonoured and marked “Drawer’s confirmation not Received”. The defendants pleaded that
dishonouring the cheques in the absence of the telephone confirmation of the plaintiff was in
accordance with industry practice and custom and was also meant to protect the customers of the
bank from fraudsters. The plaintiff averred that he had given confirmation to the defendant bank
to effect the payment on 16th July 2012.

The plaintiff upon being informed by the payees that the cheques were dishonored, contacted the
defendant bank and the cheques where subsequently honoured on the 18th of July 2012 after an
apology was rendered by an official of the defendant bank. The other three (3) cheques of the
plaintiff were also dishonoured for insufficient funds in his account.

The plaintiff subsequently instituted a civil action against the defendant bank for wrongfully
dishonouring of his cheques and exposing him to sanctions by the Bank of Ghana and a possible
criminal prosecution.

The learned trial judge in his judgment with respect to the two (2) cheques dishonoured for
“Drawers confirmation not Received” stated:

“The call back system upon which the defendant relies to have refused may not be
practicable, reasonable or convenient in all cases”. He added that “It is not the telephone
confirmation that authenticates the cheques. It is the regularity and completeness of the
mandate on the cheque that vests the authority to pay cheque in [sic] the bank.”

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The trial judge in arriving at the decision relied on the House of Lords decision in Vagliano Case8 as
referenced by the authors of Pagets Law of Banking.9

It is worth noting that the learned trial judge in his decision recognized the role of custom in
development of the banking industry by stating that:

“A lot of changes have gone on in the practice and usages in the banking industry since
Joachimson. I think judicial notice could be taken of the fact that today the order for
repayment could be made at any branch of most if not all reputable banks and not necessarily
at the branch where the account was opened.” (Emphasis mine)

The purpose of this article is to examine the legal accuracy of decision in relation to the banker-
customer relationship and its impact on the banking industry in Ghana in relation specifically to the
custom or practice of telephonic-drawer confirmation of third party cheques. The paper situates
this discussion within the context of the legal history of bank-customer relationship and the duties
of a paying bank and examines the extent to which the decision in Akwasi Boakye Osei v. Standard
Chartered Bank (hereinafter referred to as “Akwasi Osei Case) fits seamlessly into the policy
underpinnings which drive vicissitudes in the content, and structure of that relationship as well as
in the law of banking as a whole.

Nature of the Banker-Customer relationship

The law of banking can be chiefly reduced to the relationship between the bank and its customers.
This view is aptly captured by Hapgood10 as follows:

“The law of banking proper is the law of the relationship between a banker and his customer.
Basically the relationship is that of a mandator (the customer) and mandatory (the bank), but
it is nonetheless a relationship which embraces mutual duties and obligations. It is a
relationship peculiar to banking, giving rise to a contract between the two parties. The
relationship is enjoyed by no one but a bank with reference to a customer and thus it is
necessary to know what in law is a customer.”

The terms in a typical banking contracts tend to be standardized and usually contained in the Terms
and Conditions Agreement. These agreements differ depending on the product or service being
taken out by the customer. Customers sign these terms prior to an account being opened or loan

8
[1891] AC 107
9
2007 13th ed. P 427
10
M. Hapgood, Paget’s Law of Banking, (13th ed) London: LexisNexis Butterworths, 2007 at p.141.

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being offered. These standardized contracts are referred to as contracts of adhesion. A key feature
of these types of standard form contract is that they enable one side to the agreement (the
dominant party) to tilt the terms of the contract to its advantage. Whereas the delineation and
scope of what is a bank and what constitutes banking business has been decided through a mix of
statutory and judicial interventions11, the question of who a customer of bank is has only been
somewhat answered through judicial expatiations without the authoritative support of statute.12
The various judicial decisions13 have privileged the opening and maintenance of an account as the
primary activity establishing the banker-customer relationship irrespective of the frequency or
duration14 of the relationship.

The banker-customer relationship so established generates complex contractual interactions

comprising reciprocal rights and duties founded not only on the express terms of the ‘Terms and
Conditions Agreement’ but also on the customs and usages pertaining among banks.15 In this
sense, the banker-customer relationship consists of a general contract that is basic to all banking
transactions and in some instances, special contracts which arise only in relation to specific
transactions or banking services.16 Thus for instance, when a customer opens a current account
with a bank, a basic general contract on the terms of a current account governs the relationship.
However, when the same customer decides to apply for a credit card or debit card, a special
contract for those services will now be superimposed on the existing relationship. It is worth

11 What constitutes banking business has been put to bed through and intersections of legislative and judicial
interventions Section 90, Act 673 (as amended by S. 35 of Act 738): banking business" means: (a) accepting
deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft,
orders or by any other means; (b) financing, whether in whole or in part or by way of short, medium or long
term loans or advances, of trade, industry commerce or agriculture and (c) any other business activities that
the Bank of Ghana may prescribe or recognise as being part of banking business. Also see United Dominion
Trust (1966), Justice Diplock at page 986: “Accordingly it is, in my view, essential to the business of banking
that a banker should accept money from his customers upon a running account into which sums of money are
from time to time paid by the customer and from time to time withdrawn by him by cheque, draft or order. I
am inclined to agree with the Master of the Rolls and the author of the current edition of Paget on Banking, 6th
ed. (1961), p. 8, that to constitute the business of banking today the banker must also undertake to pay cheques
drawn upon himself (the banker) by his customers in favour of third parties up to the amount standing to their
credit in their "current accounts" and to collect cheques for his customers and credit the proceeds to their
current accounts. This view of the essential characteristics of the business of banking today is supported by the
evidence of the witnesses who were unquestionably bankers who gave expert evidence in the present case.”
12
See Lacave and Co v Credit Lyonnais [1897] 1 QB 148 or a person from whom the bank has accepted
instructions to open an account and receives a deposit to be credited to it, see Ladbroke v Todd[1914]30
TLR 433, Woods v Martin’s Bank Ltd [1959]1 QB 55.
13
Ibid
14
See Great Western Railway v London and County Banking Co. (1901)
15
Burdick, William L. The Principles of Roman Law and Their Relation to Modern Law 2004
16
M. Hapgood, Paget’s Law of Banking, (13th ed) London: LexisNexis Butterworths, 2007 at p.145.

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indicating that the “superimposition” does not create a new relationship but creates a special
contract based on the general banker-customer relationship.17

From the facts of the Akwasi Osei case, the plaintiff was at all material times a customer of the bank
since he operated a number of accounts with sufficient credit balances.

In most circumstances, the relationship of banker and customer would depend entirely or mainly
upon implied contract.18 Lord Atkin in Joachimson v. Swiss Bank Corporation19 reasoned as follows:

“…The result I have mentioned seems to follow from the ordinary relations [sic] banker and
customer, but if it were necessary to fall upon the course of business and the custom of
bankers, think that it was clearly established by undisputed evidence in this case that
bankers never do make a payment to a customer in respect of a current account except upon
demand.” (Emphasis mine)

Flowing from Lord Atkins quotation above, and as was apparent in Joachimson v. Swiss Bank
Corporation20, judicial decision-making, as regards the bank-customer relationship, leans
favourably towards taking judicial notice of acceptable customs of business or industry practices.

The banker-customer relationship has also been viewed as a relationship of a Principal and Agent
when the bank makes payments on behalf of its customers to third parties. This relationship mostly
comes into play in the payment of third party cheques. In Westminster Bank v. Hilton,21 Lord
Atkinson put the issue as follows:

“It is well established that the normal relation between a banker and his customer is that of
debtor and creditor, but it is equally well established that quoad the drawing and payment of
the customer’s cheques as against money of the customer’s in the banker’s hands the relation
is that of principal and agent. The cheque is an order of the principal’s addressed to the
agent to pay out of the principal’s money in the agent’s hands the amount of the cheque to
the payee thereof.” (Emphasis mine)

17
See Midland Bank Ltd v Conway Corporation [1965] 2 All ER 972
18
Joachimson v. Swiss Bank Corp. [1921] 3 KB 110 at 117
19
Ibid
20
In that case an expert witness opinion pointing to that fact that there existed a certain custom or course
of banking business where banks in the ordinary banker-customer relationship did not make payments
without a demand from the customer was conclusively admitted by the Court.

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The facts of Akwasi Osei border on the payment of third party cheques and not a transaction in the
ordinary banker-customer relationship.

In Akwasi Osei, the learned trial judge described the banker-customer relationship as a contractual
relationship. This reasoning of the court respectfully restricted the banker customer relationship
to that of only a relationship of debtor-creditor without giving room for other possible relationship
such as agency as was stated in Westminster Bank v. Hilton.22

In the case of Akwasi Osei all cheques issued by the plaintiff were third party cheques. Thus the
pendulum of the nature of the banker-customer relationship will in my considered view oscillate
between of the relationship of debtor-creditor and that of Principal and Agent.

It is argued in this paper that the amoebic nature of the banker-customer, adopting a transaction-
based analysis in determining the nature of the banker-customer relationship should be the desired
approach as opposed to fixing the parties with a contractual relationship as reasoned in the
decision Akwasi Osei. The transaction-based approach will aid in grounding a person as customer
of the bank based on the nature and ingredients and the incidence of the transaction he
undertakes with the bank. Thus the nature of the banking business consumed by a person and the
peculiar characteristics and essentials of that transaction will generates a bundle of rights, duties
and responsibilities of the parties involved in the transaction.

The preference for a transaction-based approach to determining the nature and scope of the
banker-customer relationship will require the acceptance and application of growing industrial
practices, customs and usages peculiar to such transactions. This will ensure that the banker-
customer relationship is not limited to the express terms of the standard form contract entered
into by the parties but is opened to the necessary implied terms and application of generally
accepted industry practices and customs.

Thus, if the learned trial judge had adopted a transaction-based analysis in Akwasi Osei, the court
will not have restricted the relationship between the plaintiff and defendant as mainly that of
debtor-creditor where the bank must pay on demand when a cheque is drawn on it.

Furthermore, the transaction-based analysis of determining the nature and scope of the banker-
customer relationships expands the scope of rights and responsibilities enjoyed by the parties in a
banker-customer relationship governed by a standard form contract.

22
Supra.

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Duties and Defences of Paying Banks: weighing the risk in third party
payments

In the light of strict duties and responsibilities imposed on banks, both by common law and statute
law and the very high risk of liability that banks face in the payment and collection of cheques, not
affording the banks any protection or avenues to mitigate their risk in law or by the express or
implied contractual or even through practice and customs is bound to create harsh consequence
for the business of banking.

In Ghana, the common law duty of a paying bank to exercise care when obeying its customers’
mandates does not appear to have been abrogated by statute. Accordingly, any breach of this duty
by a bank involving a customer in loss would give rise to an action for damages. Also, it is arguable,
that a bank which pays a cheque negligently is necessarily acting otherwise than ‘in the ordinary
course of business.

For the purposes of this paper, the discussions and analysis will be limited to the duties and risks
of a paying bank since the facts in the case under review were on a payment of cheques drawn on
the bank. In the Bill of Exchange Act23under certain circumstances protection is provided to banks
when making in payment in due course.24 Thus were the payment has been made in good faith and
in due course, banks are protected. The Act25 define “payment in due course” to mean:

“… payment made at or after the maturity of the bill to the holder of the bill in good faith
and without notice that the title to the bill is defective.”26

Similarly, the Act27prescribes that an act is deemed to done in good faith “where it is in fact done
honestly, whether it is done negligently or not.”28

To establish that a paying bank acted without negligence, the bank is required to show that it has
strictly adhered to the terms of the customer’s mandate. However, whether the paying bank
should in certain suspicious instances, go beyond the formal regularity of the bill of exchange to
authenticate a customer’s mandate – for instance through phone calls- in order to escape liability
for acting negligently is still not clearly defined in the law. The growing levels of fraudulent
transaction, it makes commercial sense for paying bank to adopt procedures of inquiring in order

23
1961 (Act 55)
24
See sections 57 and 59 of Act 55
25
Bill of Exchange Act, 1961 (Act 55)
26
Section 57(2) Bill of Exchange Act, 1961 (Act 55)
27
Bill of Exchange Act, 1961 (Act 55)
28
Section 90 Bill of Exchange Act, 1961 (Act 55)

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to verify the mandate of its customer. Even where there is no obvious irregularity, the paying bank
should in my respectful opinion take steps such as call backs to ascertain the mandate of the
customer.

A paying bank would be deemed to have acted in the ordinary course of business, where the usual
steps are taken by the paying bank as regards the examination and payment of the cheque. It is
argued that courts in deciding the question whether a paying bank has acted in the ordinary course
of business, courts would be influenced by the evidence of persons experienced in banking, on
such matters. However, the ordinary course of business must be the recognised or customary
course of business of the banking community at large and not of any particular bank or group of
banks. Hence, the whole question would rather depend on the facts and circumstances of the
particular case. It is, however, argued that the callback procedure should not be an avenue for
banks to use to delay or refuse payments to third parties, but as a second layer verification process
before effecting payment.

The learned trial judge in Akwasi Osei in concluding that banks have a duty to effect payment once
the instrument is regular and complete did not respectfully avert his mind to the duties imposed
on a paying bank and the position of a paying as agent of the customer. Such an understanding of
the banker-customer will have assisted the judge in appreciating practice of using such as call-
backs to confirm the payment of third party cheques.

The learned trial judge in his decision as noted above relied on the Vagliano case. This case was
decided in 1891 by the House of Lords when it relied on the dictum of Maude J in Roberts v.
Tucker29.

Respectfully, the facts of these cases can distinguished from the facts of Akwasi Osei. It must be
remembered that the point in Vagliano's Case and similarly that of Roberts v. Tucker was whether
the acceptor was entitled to say that the payee was not fictitious or nonexistent, for the purposes
of his (the acceptor's) own protection. It is very important to remember that in Vagliano's Case the
instrument was a bill of exchange in the ordinary sense of the word, and the point raised was raised
by the acceptor. The acceptor of a bill protects the credit of the drawer of the bill. It does not
matter in the least to the acceptor who the payee. In Akwasi Osei, the issue border on the use of
call backs to confirm payment of third party cheques. Also in Akwasi Osei, the cheques in question
had not been negotiated as was in the Vagliano case. The payees were the primary beneficiaries
of the instrument. Further, the decision in Vagliano dealt with a particular kind of negotiable
instrument – bills. Thus, save for the section 72 of the Bill of Exchange Act30 which defines a cheque
as a bill of exchange drawn on a bank payable of demand, there a peculiar differences between

29
[1851] 16 QB 560
30
1961 Act 55

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the two instruments. For instance a cheque is payable on demand whereas a bill is payable on
demand or a future determinable date. Therefore, in dealing with a payee of a bill in the ordinary
sense of the word, very different considerations from a commercial and mercantile standpoint
arise to those which arise when the particular form of a bill of exchange which is called a cheque
upon a bank is being dealt with.

The learned trial judge in applying the principle set out by the House of Lords in Vagliano, did not
take into consideration the peculiar characteristics of a cheque and that of bill. It my considered
view should this distinction have been made, the trial judge will have arrived at a different
conclusion as to the position of the industry custom and practice in the confirmation and payment
of third party cheques. It is worth noting that Vagliano still remains good law but the principles
therein are restricted to the facts of the case.

A finally point of distinqushing the facts of Akwasi Osei from Vagliano is the fact that save for the
above difference, the two cases belong two different epochs. Vagliano was decided somewhere
in the 18th Century when the corpus of commercial law was still developing as oppose to Akwasi
Osei – a 21st Century decision subject to the ever evolving nature of banking and banking services
and developments in commercial transaction. The chasm in time between the two cases and the
fact that the cases are commercial nature in my considered view make the application of the
precedent rule challenging since commercial principles grow and mutate in growing and not static
customs and practices. The role of the courts in commercial litigation to facilitate the doing of
business and not to hinder same.

Un-caging the caged: Banking Business beyond the decision in Akwasi

Boakye Osei v. Standard Chartered Bank

The fact that the growth of commercial law has been largely based on the growth of business
customs, usages and practices cannot the overemphasized. The court in the Akwasi Osei case
appropriately stated that the relationship between the bank and a customer is contractual. The
court, however, failed to acknowledge that the terms of this contract is may not only be express
but can also be implied based on the nature of the service or transactions between the parties over
time.

There is no denying the fact that the use of call back system in the confirmation of third party
cheques has assumed ascendency and generally accepted by banks and the customers. However,
the trial court in Akwasi Osei failed to give the necessary judicial blessing to a very notorious
banking practice of using call backs in the confirmation third party cheques. With the paucity of

Page 11 of 13
legislative intervention in the area of development of commercial law in Ghana. The court should
have embraced the opportunity offered by the case to expand the frontiers of commercial law in
Ghana particularly in the area of the modern developments in the confirmation and payment of
third party cheques. Positive judicial activism in areas that business men and women have
themselves accepted as necessary in the promotion and protection of their dealings is what is
required in developing our inadequate body of rules of commercial law. Business men in the
commercial transactions are constantly looking for ways that will facilitate how they do business.
The duty of the court is not to frustrate this effort but rather help in promoting and developing
these widely accepted customs, usages and practices.

It is argued that the court should have accepted the call back custom and practice for the
confirmation and payment of third party and should have prescribed guidelines for the
implementation of this notorious custom. For instance, the court could have drawn a distinction
between confirmation of third party cheques drawn on active account versus dormant account,
third party cheques drawn in favour of individual payees or institutional payees. This will have
invariable provided an avenue for the growth of the custom and in the long serve as a basis for
legislative intervention in the area of third party payments. The decision of the court has created a
vacuum and uncertainty in the banking industry as the practices and customs seem to be ahead of
legislation. The judiciary should be willing to accept customs and practices that are widely accepted
by the in a particular area of commerce and business. This is one way to ensure that the law keeps
up with the growing trends in the business and commerce. It is impossible to lay down as a matter
of law all the issues that concerns the banking sector as customs and practices continue to evolve.
Thus, courts in making decisions on commercial matters must be guide by factors such as the
nature of the transaction, the practice over ta course of dealing between the parties and the level
of expertise or business experience of parties to the transaction. These can assist a judge in arriving
at commercially convenient decisions rather than chiseling their epitaphs on the graves on archaic
judicial precedents.

Although, the traditional view on what constitute a banking business has not changed, the concept
of banking has evolved over the years and technology is playing a key role in the development of
new products and service for customs. The increasing rate of product and service innovation by
banks require liberal view of interpreting the relationship of the party in a banking transaction as
well as fixing the parties with rights and responsibilities. The last thing that can be contemplated
by any courts is to try to cage the growth of commercial customs and practices.

Conclusion

The court in the Akwasi Osei case stayed with the old principle of “pay when the instrument regular
and complete”. This principle and it enforcement is challenging in the light of growing technology

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and increasing fraudulent activities. The call back system by the banks are means employed by the
banks to protect their customers and also assuage their risks as paying banks. The court should
have given more direction on how this veritable custom and industry should evolve. The court
could have given directions by creating categories of high and low value cheques as against orders
or instruments drawn on/or by institutions as against orders to individuals.

The decision in Akwasi Osei has put the issue of call backs as a means of confirming third party
cheques and the liability of paying banks on the front burner. Banks are now requiring their
customers to expressly indemnify for the payment of third party cheques without prior
confirmation through call backs. In the coming years the effect of the decision will lead banks to
require their customers to sign express agreements to opt for calls backs in the payment of third
party cheques or indemnifying banks for third payments made without confirmation.

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