Question

Solve the following problems:

1. Pawi has agreed to pay Faizal for a commercial transaction. He drew a cheque amounting RM3,000.00 in favour of Faizal who submitted it to Bank Teguh shortly before 4.00pm on that day. The bank’s normal closing time was 4.00 pm and Bank Teguh paid the cheque five minutes later. The next morning, Pawi gave a call to Bank Teguh at the beginning of operating hour to stop payment of the cheque but Bank Teguh had already paid the cheque by debiting his account amounting RM3,000.00. Pawi wanted to take legal action against Bank Teguh because the payment was made after the bank closing time.

Advise Pawi. Support your answer with ONE (1) statutory provision and ONE (1) decided case.  

THE SUBJECT IS BANKING LAW

Answer 1

ISSUE:

Whether Pawi can take legal action against the Bank Teguh because the payment was made after the bank's operating hours expired (normal bank practice) or not?

SECTION:

S.60 & S.82 require a banker to act in good faith and in the ordinary course of business.

WHO: Carpenter’s Co. v British Mutual Banking Co. Ltd

A banker would be considered to be acting in the ordinary course of business even though he might have acted negligently. When a banker was acting in dual capacity, both as a paying and a collecting banker, negligence on the part of the banker in his capacity as collecting banker was sufficient to take away his right to claim statutory protection under s.82 & s.60

Or Baines v National Provincial Bank Ltd

Held: A bank is allowed a reasonable period after its advertised closing time to complete its business and that the bank had acted within its rights in cashing the cheque.

APPLICATIONS:

Pawi cannot take legal action against the Bank Teguh because the payment was made after five minutes of bankruptcies (the bank's normal practice) is still considered reasonable.

SUMMARY:

Pawi cannot take legal action against the Bank Teguh.

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