If the account shows a credit balance, the banker will be a debtor and the customer a creditor. However, the relationship between the banker and customer is directly opposite when the bank lends money to its customer. The relationship subsisting between banker and customer is basically contractual and fundamentally that of debtor and creditor. Banker-Customer Relationship: Banking is a trust-based relationship. The banker acts as an agent for the customer principal in the following circumstances. This contractual relationship start from the date the bank accepts instructions from the customers. Customers and Bankers share a fiduciary relationship with one another and build an interconnection between the two on the basis of trust. relationship can be general or special. Therefore, the banker is legally required to cash the check /check of his client in the usual course. The Current State of the Law. 2. This relationship is Relationship of bailor and a bailee; Section 148 of the Indian Contract Act, 1872 defines Bailment, bailor and bailee. Contractual relationship with Bankers. Basically, the relationship between banker and customer is contractual in nature. The contract is formed the moment customer opens an account with a bank. 2.The banker has to follow the express instructions of the customer provided these are within the scope of banker-customer relationship. The relationship between a banker and a client depends on the type of transaction. The banker-customer relationship is that of a: Other miscellaneous relationships. Discussed below are important banker-customer relationships. 1. Relationship of Debtor and Creditor When a customer opens an account with a bank and if the account has a credit balance, then the relationship is that of debtor (banker / bank) and creditor (customer). When someone walks into a bank and asks to open a banking account, he is making an offer to enter into a contract. When a customer fills and signs the account opening form he/she enters into a contract with the bank.

Although, it has related to the Ownership Bank. The contractual relationship which exists between banker and customer is founded from DBA 411 at University of Nairobi The relationship between a banker and a customer depends on the type of transaction. The Banker-Customer Relationship. Carefully explain the following types of general relationships in the banking business: i. The relationship between banker and customer is essentially a matter of contract. This is to say that the bank under normal banking operation is supposed to respect only the written terms of the contract between it and the customer. Relationship of Trustee and Beneficiary.

It is essentially that of a debtor to a creditor, in the case of credit balances. The legal relationship between a customer and the bank is based on contract and is generally classified as a debtor-creditor relationship. There is a primary relationship between Banker and customer is debtor and Creditor. A banker is a person who on the behalf of bank receives the money and collects cheques and drafts. The reciprocal rights and duties included in the contract are to a great extent based upon custom and usage. Relation between banker and customer is consensual depending on express or implied contract between two. When the banker accepts deposits from the customer then the bank becomes the debtor and the customer is the creditor. The relationship between bankers and customers arises out of contract entered in between them. 1.The banker is also under obligation to maintain proper record of transactions of customer. The relationship between a bank and its customer goes beyond that of creditor / debtor relationship. The example is A appointed B to be his agent to buy goods from C. A will be known as the Principal, B is the agent while C is the third party. But in case of debit balance or overdraft, the banker will be the creditor and the customer the There are four circumstances where a fiduciary relationship might arise between the bank and the customer , i.e. Relationship Between Banker and Customer 2. Contractual Relationship The relationship is contractual The contract is drafted by the bank and is non- negotiable Protection of customer (consumers) is by statutory protection & Banking Codes Debtor - Creditor Foley v Hill A customer brought action against banker for moneys had & received. Agency relationship creates two contracts enforceable by law. It is basically a contract agreement between the bank and its customer. HELD: "The relationship of a banker to customer is contractual.

the contractual relationship between banker and customer is regulated by the rules contained in the negotiate Negotiable Instrument Act, 1881 and Contract Act, 1872. The contract conferred reciprocal rights and duties upon the parties. https://blog.ipleaders.in/relationship-between-banker-customer #2. The general relationship between a banker and customer is: 1. RELATIONSHIP BETWEEN A BANKER AND CUSTOMER. Debtor & Creditor relationship (Primary) 14 marks ii. It consists of general and special contracts arising from the particular requirements of the business of banking. The bankers' obligation to maintain secrecy arises out of the contractual relationship between the banker and customer, and as such no information should be divulged to third parties except under circumstances which are well defined. The depositors are creditors and the bank is the debtor. A reasonable definition of a customer may therefore be: a person who has an account or an account in contemplation, and where the banker has agreed to open an account if so requested. Collection of cheques, dividends, bills or promissory notes on behalf of the customer. The relationship between a banker and a customer is as follows: Contractual Relationship: The contract takes place the moment an account is opened by a customer with a bank and this contract remains valid till the customer operates his account as per the terms and conditions agreed between them. However, they also share other relationships. There are numerous kinds of relationship between the bank and the customer. Transcribed image text: QUESTION TWO The relationship between the banker and a customer is basically the contractual relationship. The legal relationship between a customer and the bank is based on a contract and is generally classified as a debtor-creditor Relationship between a banker and a customer may be: Contractual relationship: Due to the contract between the two, this relationship is said to be the primary one that exists between bankers and customer. However this statutory obligation is not absolute. THE RELATIONSHIP BETWEEN BANKER AND CUSTOMER IS CONTRACTUAL IN NATURE. A banker, in addition to his primary functions, renders a number of services to his customers. BANKER CUSTOMER RELATIONSHIP: It obviously means that to become a customer account relationship is must. Account relationship is a contractual relationship. Banking is a trust-based relationship. There are numerous kinds of relationship between the bank and the customer. The following exceptions to the said rule are normally accepted: Where disclosure is under compulsion of law In this banking and customer relationship, both parties have obligations and rights. It also consists of general and special contracts arising from the particular requirements of the banking business. 1. a. Relationship between Banker and Customer. Such relationship relates to the society, emotional attachment and legal aspects since both banker and customer serve the country in helping it to grow and expanding the economy. (1) when it is receiving or transferring the customers money; (2) when it is giving advice in a position of conflict of duty and interest; (3) when the bank is holding confidential information of its customer; (4) where money is mistakenly paid or credited. THE NATURE OF BANKER/CUSTOMER RELATIONSHIP The relationship which subsists between a banker and his customer is basically contractual and fundamentally that of the debtor and creditor. Since bank offers the variety of services to the customer, the relationship between the bank and the customer vary according to the type of service rendered by the bank. When a customer opens an account there arises a contractual relationship between the banker and the customer by virtue of which the banker undertakes an obligation to honor its customers' cheques. Debtor and Creditor relationship. The classic description of the contractual relationship that exists between banker and customer is aptly given by Atkin L.J. These days the bank plays an important role and renders a large number of agency services of different nature. In a special relationship comes the obligation and rights of a banker. As a banker, particular obligations are to be fulfilled towards the customer. Following are the obligations: An obligation to honour the cheque of the customer. Firstly, a contract of agency between Principal and Agent and secondly, a contract of sale between Principal and Third party. https://legalstudymaterial.com/relationship-between-banker-and-customer This obligation is a statutory obligation under section 31 of N. I. The All banking transaction are based on the law of contracts in general together with the law on special contracts which govern specific transactions or banking services such as standing orders, bankers drafts, letters of credit and foreign currency. Even once the bankers lend to the customers, the bankers are the debtor and the customers are the creditor. the contract is created by mutual consent. And when the customer deposits money in their account, the customer becomes a creditor and the bank becomes a debtor. Thus the relationship is based on contract, and on certain terms and conditions. The relationship between banker and client is not only that of a debtor and a creditor. The terms of the banker-customer This web site has had many articles on this matter and a survey, conducted on our behalf by ICM, showed great confusion on the part of the British public concerning the legal relationship between banker and customer. In case of banking where a person asks the banker to open an account for him and the bankers acceptance thereof, constitutes implied contract of relationship.

The law treats the relationship between banker and customer as a contractual one.

Banker becomes creditors of the customer who has taken a loan from the banker and continues in that capacity till the loan is repaid. Contractual Relationship: The contract takes place the moment an account is opened by a customer with a bank and this contract remains valid till the customer operates his account as per the terms and conditions agreed between them. However, a customer is a person who opens an account in the bank and which the banker accepts with proper information. The terms Customer and Banker have not been defined under any specific statute although, various legal philosophers have tried to define and give an understandable meaning to these terms. Thereby a contractual relation springs between banker and customer. But who is what at a particular moment depends on the state of the customer's account. Act . The bank becomes the creditor and the customer becomes the debtor. As a result, the debtor and creditor relationship between the customer and the banker are created nicely. When a banker accepts items like securities or documents for safe custody or T he opening of an account with a banker, and the banker's acceptance for such opening of account gives rise to a 'contractual relationship'. The relationship between the banker and customer is, generally, like a ' Commercial Transaction'. Bankers relationship with the customer is reversed as soon as the customers account is overdrawn. Abstract:-The banker/customer relationship is a relation based largely on contract with well-defined terms. This means that when a bank or other type of ADI accepts money from a customer it does so as a borrower on terms that may be implied. The money is then owned by the bank to use as it pleases and the customer has the right to ask March 5, 2020. Definition of Banking Accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. https://bankingdigests.com/blog/banker-customer-relationship

3. The relationship between a bank and a customer ends at: the deposit accepted by a banker is his liabilities, which can be repaid on demand or by other means. The key case is Carr v Carr 1811 (reported in Merivale (541 n) 1815 17). significance of banker-customer relationship cannot be underestimated. One can take the money from the bank but the relationship is not based upon the frequency of transactions. When a customer pledges an article (goods and documents) with the banker as a security for the payment of debt or performance of the promise, the customer becomes a pledger and the banker becomes the pledgee. Agent and Principal relationship. This The relationship between a banker and a customer is as follows: 1. After the account in the bank is opened and the relationship of a banker and customer is established, the bank not only undertakes to collect the cheques which are deposited, in the account but also makes the payment on behalf As such, the relationship existing between banker and customer cannot be exhausted. The general legal relationship of bank and customer is contractual relationship, started from the date of opening an account. Meaning:- A person who has a bank account in his name and for whom the banker undertakes to provide the facilities as a banker is considered to be a customer. One of the important relationships between the banker and the customer is the relationship of agent and principal. [ 1 ] When customer deposits money into his bank account, the bank becomes a debtor of the customer.