Duties Of Paying Banker | Duties And Liabilities Of Paying Banker
The duties and responsibilities of the payment banker could be said to revolve around the payment and collection of cheques. However, banks involved in the collection and payment have specific duties to perform to avoid the legal risk that often arise.
There are duties a banker owe its customer based on the banker customer relationship. The paying banker is the drawee banker, he is the baker with whom the drawer of a cheque enter into contractual relationship by opening account.
When you check the rights and duties of collecting and paying banker then you understand that goes beyond just banking business.
The duties of paying banker comes up in the situation where a cheque is presented to the paying banker either over the counter or through internal collection, by either post or through the clearing house, he has two primary duties to perform in relation to the cheque.
Apart from the duties of paying banker, the banker also faces the liabilities if he fails to discharge these duties properly, he can acquire some legal protections against the liabilities or risk arising from paying cheques.
Rights And Liabilities Of Paying Banker | Duties Of Paying Banker
The duties and liabilities of the paying banker as well as his protection is however affected by the following factors if not properly checked;
The rights, duties and liabilities of the paying banker as well as his protection is however affected by;
- The type of cheque
- The type of crossing (if it is a crossed cheque)) and
- The manner the cheque was presented. The effect of these types of cheque have already been discussed in the proceeding events.
A paying banker has two basic duties when a cheque is presented to him for payment. First is the duty to pay the cheque where there are no genuine legal reason not to pay. Second, is to return the cheque within reasonable time with an answer if he has a legal reason to dishonour the cheque. Let us quickly look at how the baker performs these duties briefly.
Duty To Pay Cheque
The meaning and duties of paying banker, based on the rule in Joachimson’s case, a paying banker has a primary duty to pay a customer a cheque within banking hours at the branch where the account or the customer has arranged for an overdraft.
To pay a cheque simply means to give financial value to a cheque, giving the value can be done by either paying cash over the counter when the cheque is presented for payment or by crediting the account for the payee or releasing the money to be collecting banker who subsequently credits the payee’s account.
A cheque is also said to be paid once an appropriate officer of the bank authorizes that the cheque be paid or given value. By signing his signature across the face of the cheque.
The process involved in paying cheque is one of the simple duties of paying banker. When the cheque is presented for payment, an officer of the drawee bank verifies the regularities of the cheque by cross-checks the customer’s signature, the amount in words and figures, the dates and other features of the cheque to ensure that it is properly drawn and regular on it’s face.
It is his duty of the banker to confirm whether there are sufficient funds in the account or if an approved overdraft cover the value of the cheque. He also ensures that the cheque is drawn in accordance with the customer’s initial mandate. If the officer is satisfy, he appends his signature across the face of the cheque to authorize it’s payments. Where the amount involved is large and above the approval limit of a particular officer, the cheque is taken to another officer to also verify and add his own signature.
The statutory protection to paying banker is paramount for the bank although the first duty of the paying banker is that he owes his customer concerning cheques is the duty to pay cheques. Based on the rule in Joachimson’s case, a paying baker is under a contractual obligation to pay his customer’s cheque that is properly drawn and presented ti him during banking hour.
One of the duties of paying banker is that he must treat that cheque as a demand for the payment of debt owed to the drawer of the cheque.
Limitations Of Duties Of Paying Banker
There are however, some limitation to the bankers duty to pay cheques. The limitations arises from those circumstances where the law permits a banker to refuse to pay his customer’s cheque without incurring liabilities. A paying banker can rightly refuse to pay his customer’s cheque under the following circumstances;
- Notice of customer’s death
- Notice of customer’s mental incapacity
- Insufficient funds
- Countermand of payment
- Service of a garnishee order (Or legal bar to payment).
- Notice of defect in presenter’s little
- Forgery of drawer’s signature
- Breach of trust
- Material alternations and irregularities
- Notice of assignment of account
When any of these limitations occurs, the paying banker must act with caution. The duties of paying banker stipulates that he must be cautious enough to refuse to pay the cheque.