Topic 3

Question 1

What are the types of banker-customer relationship?

Answer 1

debtor-creditor
principal-agent
bailor-bailee
mortgager-mortgagee
trustee-beneficiary

Question 2

What are the ways in which a customer and banker relationship is terminated

Answer 2

closure of account
death of customer
mental disorder of customer
bankruptcy of customer

Question 3

What are the exceptions to banking secrecy

Answer 3

consent of customer is given
interest of bank to disclose
public interest is involved
disclosure due to compulsion by law

Question 4

What are the technical details the paying bank has to check ?

Answer 4

date on cheque 
payee named unless bearer cheque 
amount
crossing 
signature

Question 5

What are the other aspects the paying bank has to check ?

Answer 5

countermanded payment
drawer's death
operation of law
breach of trust 
sufficient funds or unused overdraft

Question 6

What are the protection available to paying bank?

Answer 6

statutory protection

defense of estopped

Question 7

What are the duties of a collecting bank?

Answer 7

collecting as agent

collecting as a holder for value

Question 8

How does a collecting bank act as an agent?

Answer 8

present cheque for payment without delay

Giving prompt notice of dishonour

Question 9

When can a collecting bank become a holder of value?

Answer 9

Encashment of cheques
reduction of advance
payment against uncleared effects

Question 10

What are the examples of negligence by a collecting bank

Answer 10

opening account without reference
Not enquiring fiduciary relationship
amounts inconsistent
irregularity of transaction

Question 11

What are the protection available to the collecting bank?

Answer 11

statutory protection
defence of estoppel
defence of contributory negligence
bank’s right to an indemnity