NOTES OF CASES
| Published date | 01 May 1966 |
| Date | 01 May 1966 |
| DOI | http://doi.org/10.1111/j.1468-2230.1966.tb00739.x |
NOTES
OF
CASES
THE
BANKER-CU~TOMER
CONTI~ACT
Burnett
v.
Westminster Bank
1
raised the interesting and funda-
mental question of what is necessary to nlter the basic banker-
customer contract, The plaintiff had accounts with two branches
of the defendant bank, one of which (A) operated the electronic
computer system and the other
(B)
did not. Using
a
cheque form
of branch A the plaintiff altered the heading to read branch
By
completed the instrument for
€2,800
and delivered
it
in payment
of
a
gambling debt which
he
had incurred on behalf of himself and
two non-playing partners. The following day, deciding to counter-
mand payment, he telephoned branch B and instructed
it
not to
pay, following this up with
a
letter confirming the countermand
and, incidentally, indicating that the instrument was drawn on
a
cheque
form
of
A
branch. The instrument was duly presented in
the clearing to the Westminster Bank computer centre and was
directed to branch A, the magnetic lettering at the foot of the
cheques issued by that branch preventing them from going else-
where. At branch A someone should have noticed the change of
name of the branch on which the instrument was drawn; instead
the cheque was paid. Cheque-books issued by branch
A
bore
on
their cover
a
note to the effect that
cc
The cheques and credit slips
in this book will be applied to the account for which they have been
prepared. Customers must not, therefore, permit their use on any
other account.”
The defendant bank alleged that
it
wns an express term of the
banker-customer relationship that cheque forms of branch A would
be applied to the accouht for which they were prepnred and also
that customers wbuld not use them
or
permit their
use
on any other
nccount. These terms were allegedly contained in
a
letter from
the bank to the plaintiff, of which he had no recollection. The
bank further asserted that, in the alternative, the plaintiff wns
in
breach of
his
contract with the bank in altering the cheque
as
he
did. The parties agreed
d
stntement of facts by which the plaintiff
admitted that
he
had seen the notice
on
the cheque-book cover,
but had not read it, even
less
had agreed to
it.
The plaintiff claimed the sum of
$2,800
as
damages for breach
of his mandate not to pay the cheque; or for money had and
received to his use;
or
as
money lent. He asserted that
(a)
the notice was inadequate to affect the basic contractual
position between banker and customer;
1
119661
9
Lloyd’a
Rep.
918; [106G]
8
All
E.R.
81.
815
816
THE MODERN LAW REVIEW
VOL.
29
(b) there was no consideration for the imposition of
a
new
express term upon the basic implied contract;
(c) even
if
he must be regarded
as
contractually bound, the
alteration of the name of the drawee branch prevented the
cheque from being mandate to the bank to pay
it
and to
debit his account at branch
A;
and that,
(d) assuming that he had been in breach, this gave thc bank
the right only to sue for damages, not to pay the cheque.
The defence failed on the ground that the notice
on
the cheque-
book cover was not adequate notice. The bank argued that, having
seen the notice, the plaintiff must be taken to have accepted its
terms, not having objected to them; and tried to draw an analogy
with the
“
ticket
”
cases. The plaintiff, however, pointed out that
there was no analogy. The basic contract between banker and
customer
was
an
implied one, which came into existence at the time
the account of the plaintiff was opened and was a continuing agree-
ment, in the same tcrms
as
those in which
it
started, until later by
mutual agreemcnt
it
was changed.
On
the other hand, the
(‘
ticket
”
contract came into existence purely
as
the result of the
passenger’s request and at the moment the ticket was sold; he had
either to accept it
or
refuse
it.
In the former case there was time
and necessity for the change of relationship
to
be approved by both
parties; in the latter, there was none, which fact
in
both cases must
be within the contemplation of the parties.
While, however, the learned judge was not prepared to find thc
analogy with the ticket cases
and
held that the notice was not
adequate to change the relationship
so
as
to bind the customer,
he said that he would
‘‘
. .
,
be prepared
to
accept
as
the equivalent of the latter
[Le.,
a document signifying the customer’s approval of the
new condition] the signature of the customer upon
a
cheque
provided that the chcque
form
itself bore words limiting its
use to the bank, branch and account shown
in
print upon
it.”
The learned judge added to this, on the plaintiff’s points
(a),
(b)
and (c) above, that
“
as
at present advised,
I
do not think that any
of these points would have availed the plaintiff had the defendants
succeeded on the point
as
to notice.”
The learned judge dismissed
all
the plaintiff’s arguments but
the one
as
to the adequacy of the notice. However,
it
might be
thought that, even if the notice relied on by the bank had been
upon the cheque itself, this would not justify the bank’s debiting
the cheque to the account at branch
A,
if the name
of
the drawee
branch had been altered to branch
B.
The instrument evidenced on
its face that it was
a
mandate addressed to
B
branch and, without
the positive nnd cxprcsscd approval
of
the drawer, the bank could
not debit the account at branch
A.
This is not affected by the fact
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