Answer1 - REVISION PROBLEMS Cheques Nama Pty Ltd(Nama was an insurance broker Several years ago it had been approached by Austral Bank to bank with

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REVISION PROBLEMS Cheques Nama Pty Ltd (Nama) was an insurance broker. Several years ago it had been approached by Austral Bank to bank with it as it assured Nama that it was familiar with insurance business. It therefore knew that the most of the monies in Nama's account would represent insurance premiums. It was not, however, a trust account. Nama had been approached by Australian Insurance Intermediaries Pty Ltd (ANI) which led Nama to believe that ANI could facilitate insurance with an insurer by the name of Reinsurance Co of Australian (RCA). It turned out that the man (Grant) behind ANI was a rogue. There were five cheques written out by Nama drawn on the Austral Bank and they took the following form. The name of the payee was Reinsurance Company of Australia followed by the words "or bearer". Nama signed the cheques and they were crossed and marked "Not negotiable". The cheques totalled $202,000. Nama posted four of the cheques to ANI’s office in Melbourne. They were in envelopes addressed to RCA. These cheques were ultimately collected by North Bank in Melbourne for an account entitled Australian Insurance Intermediaries Pty Ltd (ANI). Of the four cheques that ended up in the account of Australian Insurance Intermediaries Pty Ltd IIE one was endorsed “ANI Intermediaries, Grant”. Another was endorsed “Pay ANI” and signed by Grant. The other two cheques were not endorsed. Strictly speaking there was no need for the cheques to be endorsed since they were bearer cheques. The monies were paid by the North Bank to the ANI account in Melbourne and subsequently withdrawn. Grant has disappeared.
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Nama Pty Ltd wants your advice as to remedies (if any) against the paying bank, Austral Bank, and the collecting bank, North Bank. Answer Nemur Varity Pty Ltd v NAB [1999] VSC 342 Main points where the customer’s account is for a special purpose an obligation is imposed on the paying bank not to pay cheques to parties who were not obviously in the contemplation of the drawer when the drawer wrote out the cheques if a bank collects a cheque for someone other than the true owner it will be liable in conversion unless it can establish that it has not been negligent. The burden of proof rests on the bank to establish this. failure to comply with the bank’s instruction manual may be viewed as evidence of negligence depending on the circumstances, failing to question the deposit of a cheque into an account other than that of the payee may be viewed as negligent even when it is a bearer cheque although endorsements on a bearer cheque are not needed to transfer it to another party, if such endorsements do exist, they should raise queries by the collecting bank
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Letters of credit Australian Antique Imports Ltd (AAI) has contracted to buy 500 antique tables from Antiquity Furniture Ltd (AF) in America for
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This note was uploaded on 10/08/2011 for the course LAW 101 taught by Professor Jan during the Three '11 term at Monash.

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Answer1 - REVISION PROBLEMS Cheques Nama Pty Ltd(Nama was an insurance broker Several years ago it had been approached by Austral Bank to bank with

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