Assignment 7

What is the liability of a paying banker?




A banker is generally bound to honor his customer's cheques when they are duly presented for payments, provided that they are duly presented for payment, provided that they are duly filled and in proper form. But the bankers do not pay the cheques under the following circumstances.

A. If the banker has notice that the customer has died or been declared bankrupt, or mentally incapable or banker customer relationship is terminated on any other ground.

B. If the customer has stopped payment or countermand the payment o the cheque.

C. If the customer does not have sufficient funds in the account to meet the cheque. But if the bankers so desires, he can honor a cheque even though the account does not have sufficient funds provided the banker has confidence that his customer will settle the dues. That depends on the trustworthiness and relationship in between the customer and the banker.

D. If there is a legal bar such as garnishee orders.

E. If the banker has knowledge that the payment of the cheque would amount to a breach of trust such as the holder of the cheque has no title thereto..