An Overview of the Contractual Obligations of a Customer to the Banker.
Upon the decision of a customer to utilise the services of a particular bank, he is obligated to perform certain duties within the context of the banker-customer relationship, some of which are underlisted.
I. Make Demand in accordance with the Requisite Procedures
In the course of setting out the terms of the reciprocal implied agreement between banker and customer, Atkin, L.J in his epochal judgement in Joachimson v. Swiss Bank Corporation, observed as follows:
I think it is necessary for a term of such a contract that the bank is not liable to pay the consumer the full amount of his balance until he demands payment from the bank, at the branch at which the current amount is kept. Whether he must demand it in writing, it is not necessary now to determine[13].
whether a demand is necessary before the banker becomes liable is important. At common law, the general rule is that the debtor’s obligation to repay his creditor involves the duty of seeking him out and tendering payment.
Today, the position is well settled that the presentation of the customer’s cheque at the paying banker’s place of business constitutes a valid demand. The development of modern technology has made it possible for bankers to go ‘online’ with the result that a customer can obtain payment at a branch other than that at which his account was kept.
II. Duty not to mislead the banker to facilitate forgery
This involves a duty to draw his cheque with care and diligence and in a manner that will not facilitate fraud, forgery or unauthorized alteration[14]. It was held in the case of London Joint Stock Bank Ltd. v Macmillan & Arthur[15] that in drawing a cheque, the customer owes a duty to the bank to take reasonable precautions against possible alteration of the cheque.
III. Duty to repay any overdraft granted
The grant of an overdraft facility is entirely at the discretion of the bank. Neither in the contract nor in duty is the banker obliged to honour every request for an overdraft. However, when the facility is given, the beneficiary becomes duty-bound to repay the sum lent. It was established in the Joachimson case that demand is a condition precedent before the customer can issue a writ against the bank, so also does the decision in Johnson v. Sobaki[16], which established that a banker who has lent money on overdraft must first call on the customer to repay. In addition to making a demand, the bank must also allow the customer reasonable time to repay.
IV. Duty to pay bank charges for service rendered
The decision of Ayoola, JCA, in First Bank of Nigeria Ltd v. African Petroleum Ltd[17] where his lordship stated:
In whatever manner the obligation is defined, that law seems certain that generally, the banker can only part with the customer’s money in his hands on the order of the customer. In terms of loan relationship, the banker can only validly repay the loan or such part thereof as demanded by the customer or on the customer’s order. This general statement is subject to apparent exceptions as when the banker deducts charges and commissions from time to time. The authorization to do so is implied either in usage or as a term of the contract implied in normal practice.
The judgement quoted above recognizes the banker’s right to charge for service well rendered as a commission, based on an implied authority found in usage or as a term of the contract. Holden, while considering the legal basis for charging commission, listed four grounds;
a. The customer may have entered into an express agreement with his bank, allowing for commission charges.
b. In the absence of an express agreement, an implied agreement may be inferred from previous dealings between the bank and the customer.
c. The right in the absence of an express agreement or acquiescence resulting from previous dealing, may be anchored on principles that where one person requests another to perform professional service, the law implies a promise on the part of the first person to pay a reasonable sum for service rendered.
d. It may be desirable to obtain the customer’s consent to charging of commission when, for instance, owing to rising costs the bank desires to make a charge on services previously rendered free of cost[18].