Banking Law Ass

Banking Law Ass - Module 1 option2 Part (a) There are two...

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Module 1 option2 Part (a) There are two main issues raised in this question, firstly whether Mike is a customer of the Bank? There is no statutory definition of the term “customer” of a bank. However, in common law definition, the relationship of banker and customer does not arise unless both parties intend to enter into such a relationship 1 . In the case of Robinson v Midland Bank Ltd 2 , a bank-customer relationship existed because the bank accepted a person as customer. Applying to the present facts, the bank accepted Mike as a customer when Mike requests the bank for financial advice. Secondly, according to common law definition, the banker-customer relationship is considered to have been established from the date the bank accepted the instructions of the would-be customer even though at that time there was no account in existence 3 . In the case of Woods v Martins Bank Ltd 4 , Salmon J argues ‘the defendant bank accepted the instructions contained in the letter of 9 May 1950, as the plaintiff’s bankers, and at any rate from that date the relationship of the banker and customer existed between them’ Applying these principles of law to the subject question it further proofs Mike’s relationship with the bank as he discussed with the Bank manager about investing in a small café which means Bank manager accepted Mike’s instruction for advising the option of investing in that café even though Mike might not have a current account with the Bank. Therefore, Mike is the customer of The Bank. As a customer, the bank must have obligations to Mike. There is a contractual relationship, which include express terms and implied terms, between the bank and Mike. The bank must be responsible and careful for any advice given to Mike for the investment opportunity. It is important to make sure that Mike is a customer, because by doing so, the bank accepts responsibility. 1 Tyree A, Banking Law in Australia , 6 th ed., Butterworth, Australia, 2008 2 (1952) 41 TLR 402 3 Tyree A, Banking Law in Australia , 6 th ed., Butterworth, Australia, 2008 4 (1959) 1 QB 55; (1958) 3 All ER166
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Part (b) The next issue raised is whether Xanadu and Xeres are customers of The Bank. The common law states that a person must have some sort of account to be a customer of the bank. 5
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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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Banking Law Ass - Module 1 option2 Part (a) There are two...

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