Most, if not all of us, maintain bank accounts. Banker-customer relationship begins no sooner the customer opens an account and a banking service is transacted. A remarkable feature of this relationship is its attendant legal rights and obligations on both sides.
It is of interest to note that the relationship between a banker and a customer depends on the activities, products or services provided by the bank to its customers.
Who is a Bank/Customer?
The relationship between a bank and its customers is a transactional relationship built on trust. Dr H.L Hart, in the Law of Banking defines a bank/banker as “A person or company carrying on the business of receiving money and collecting drafts for customers subject to the obligation of honouring cheques drawn upon them from time to time by customers to the extent of the amount available on their current account.” Section 258 of the Evidence Act 2011 defines a bank/ banker as a bank licensed under the Banks and Other Financial Institutions Act (BOFIA) and includes anybody authorised under an enactment to carry on banking business.
“Banking business” under Section 66 of BOFIA is defined as “The business of receiving deposits or current account, savings account or other similar account, paying or collecting cheque drawn by or paid in by customers? provision of finance or such other business as the Governor may, by order published in the Gazette, designate a banking business”.
In the case of S.B.N. Ltd. v. De Lluch (2004) 18 NWLR (Pt.905)341, this “....consist in the issue of notes payable on demand intended to circulate as money when the banks are banks of issue; in receiving deposits payable on demand; in discounting commercial paper; making loans of money on collateral security; buying and selling bills of exchange; negotiating loans, and dealing in negotiable securities issued by the Government, State and National, and municipal and other corporations”.
A person cannot be referred to as a customer of a bank without holding an account with the bank. It is immaterial whether the account is opened in the name of a person in trust for another; the name on the bank’s record will be regarded as the customer.
There must be a contractual relationship between the parties; the customer willingly opens an account, entrusting the care and management of his money to the bank and the bank undertakes to maintain the account and provide the attendant services. It is not an assumed relationship; the fact that a person walks into a banking hall to simply cash cheques or deposit money into an account or use an automated teller machine does not automatically make him/her a customer, neither do regular casual transactions, even over a long period of time.
The court in NDIC v Okem Enterprises Limited (2004) 10 NWLR (Pt. 880) 107, Ironbar v FMF (2009) 15 NWLR (Pt. 1165) 506, defines a customer of a bank as any person having an account with a bank or for whom the bank has agreed to collect items and includes a bank owning on account with another bank. Thus, a customer is a person whose money has been accepted by a bank on the undertaken to honour cheques up to the amount standing to his credit. Customers of the bank may include individuals, firms,organisations and other banks.
Legal rights and duties under the Banker/Customer Relationship
A banker-customer relationship is contractual in nature, imposing certain rights and duties on both parties. It is that of debtor and creditor, with a duty on the bank to comply with existing laws and regulatory directives.
Flowing from this is an agency relationship between the bank and the customer giving rise to a duty of care; i.e. in addition to obeying the instructions of the customer (the principal), the bank (agent) must also use reasonable care and skill in carrying them out with as view to protect the customer and his money. A bank’s duty of care may arise in tort as well as in contract where it is proven that a bank has been negligent and has failed to carry out the instructions of a customer with reasonable skill and diligence. In particular instances, depending on the nature of the transaction, the bank/banker may owe a customer a higher duty of care than usual; i.e. a fiduciary duty.
In addition to a bank’s obligations under law, the bank also owes its customers a duty to:
The customer is not without obligations/duties. These include to:
Termination of Banker/Customer Relationship
Where the terms of a contract become impossible to perform due to circumstances not in the contemplation of the parties, the contract is said to have been frustrated. This may also apply in a banker/customer contractual relationship.
In Diamond Bank vs. Ogochukwu (2008) 1 NWLR (Part 11067), incidences which may frustrate a contract where listed to include:
A banker/customer relationship may also be terminated. This maybe by:
Operation of Law – this could be as a direct consequence of the:
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