Negotiable Instruments in UK Law

It is well established that the normal relation between a banker and his customer is that of debtor and creditor, but it is equally well established that quoad the drawing and payment of the customer's cheques as against money of the customer's in the banker's hands the relation is that of principal and agent. The cheque is an order of the principal addressed to the agent to pay out of the principal's money in the agent's hands the amount of the cheque to the payee thereof.

But such is the common law of England, and one of the consequences of the historic origin of the tort of conversion and its application to negotiable instruments as "goods" is that the tort at common law is one of strict liability in which the moral concept of fault in the sense of either knowledge by the doer of an act that it is likely to cause injury, loss ordamage to another, or lack of reasonable care to avoid causing injury, loss or damage to another, plays no part.

At common law one's duty to one's neighbour who is the owner, or entitled to possession, of any goods is to refrain from doing any voluntary act in relation to his goods which is a usurpation of his proprietary or possessory rights in them.

On the back is written the following: "The issuing Banks undertake that any cheque not exceeding £30 will be honoured subject to the following conditions: a. The signature on the cheque must correspond with the specimen signature on this card. The cheque must be drawn on a bank cheque form bearing the code number shown on this card." The cheque must be drawn before the expiry date of this card. The card number must be written on the reverse of the cheque by the payee."

It is to be observed that in contrast to the second limb of paragraph (d) of Section 6 of the Moneylenders Act 1900, that for a person to fall within this description, banking need not be the primary object of the business carried on by him. The second is that the transactions relied upon as constituting the accepting of deposits of money from customers on running account must be genuinely of this legal nature and not a mere disguise for transactions of a different legal nature.

(1) That the drawer has an account with that bank; (2) That he has authority to draw on it for that amount; (3) That the cheque, as drawn, is a valid order for the payment of that amount (i.e. that the present state of affairs is such that, in the ordinary course of events, the cheque will on its future presentment be duly honoured).

We would pay tribute to the lucidity with which the learned Judge presented to the jury the law which the House of Lords had declared in relation to deception in a cheque card transaction. If that analysis can be applied to this credit card deception, the summing-up is faultless. But, in our view, there is a relevant distinction between the situation described in Charles ( supra) and the situation devised by Barclays Bank for transactions involving use of their credit cards.