Unit 5: Other Legal Obligations Flashcards
When is a relationship between bank and customer generally considered to have started?
In general, the relationship between a bank and the customer is considered to be a contractual one which begins when an account is opened.
What are the two important relationships between the bank and their customer.?
- Debtor / Creditor
- Principal / Agent
What is an example of a principal / agent relationship?
When the bank acts as agent for its customer when making periodic payments to a third party or transfers money from the customer’s account to another as instructed by the customer. The bank, as agent, is required to demonstrate reasonable skill and care in carrying out the instructions of the customer (principal).
What 6 elements are required for a valid contract?
- Offer and acceptance
- An intention between the parties to create binding relations
- Consideration to be paid for the promise made
- Legal capacity of the parties to act
- Genuine consent of the parties
- Legality of the agreement
What are some examples of common banking contracts (4)?
- Opening a savings account.
- Insurance policy.
- Loan agreements.
- Finance company agreements.
The legal framework of Australia has two main sources of law - what are they?
- Statute law
- Common Law
What is Statute law?
Legislation developed by the Government
What is Common law?
Case law developed by precedent in legal cases based on a judge’s decision.
Explain principle of precedent?
Common law relies on principle of precedent, meaning courts are guided by previous court decisions (particularly those with higher authority).
Common law is written down to the extent found in decisions by courts. It can be difficult to find common law applicable to a particular situation.
If there is a conflict between statute law and common law, which prevails?
Statute law always prevails over common law if there is a conflict.
Explain how common law developed?
- Began in England in 11th Century.
- Established by William the Conqueror, King of England, of the Kings Courts.
- Courts would apply local customs to solve local disputes.
- Overtime, these customs became rules and were the basis for later courts to make decisions in similar disputes.
- Common law was the main body of law until the 17th century when the British Parliament increased its law-making power and activity resulting in more law coming into being through Acts of Parliament.
- Australian contact law was initially derived from this English model of common law.
- Australian Acts of Parliament has altered the English model (Australian contract law now differs from its English origins).
What is a fiduciary?
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more parties.
What is fiduciary relationship?
One person (usually vulnerable) places trust/reliance in another person, whose aid/service/protection is sough in some matter.
What is a fiduciary duty?
The requirement for a fiduciary to act at all times for the sole benefit and interest of the one who trusts them.
Is a planner considered to be a fiduciary?
Yes
