Banker and Customer Relationship

Abstract

There is no really adequate definition of the term “banker”, neither is there a statutory definition of a “customer.” Nevertheless it is important for a banker to know what constitutes a customer, especially bearing in mind the purposes of Section 4 of the Cheques Act 1957. The length of association is not now considered to be an essential feature, but the customer must have an account, although the intention to open an account may suffice. A series of isolated transactions carried out by a banker for a person (e.g. the collection of cheques for someone who has no account and the payment to the person of the proceeds after clearance) does not make that person a customer. 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. When someone walks into a bank and asks to open a banking account, he is making an offer to enter into a contract. When the banker agrees to open the account, he is legally accepting the offer and thus a binding contract is created. However, before committing himself, the banker will want to be satisfied that the person will be a suitable customer, either by personal introduction, by taking and following up references or making some form of enquiry (see later).