Banking · Operation of Trust Accounts and Authority Mandates
A Public Charitable Trust has three trustees: P, Q, and R. The trust deed permits any two trustees to operate the bank account. In early 2024, Trustee P resigned, and Trustee S was appointed. A resolution authorized Q and S to operate the account, and the bank updated its records. In June 2024, Trustee R dies. In July 2024, a cheque signed by P (the resigned trustee) dated December 2023 is presented. Simultaneously, the bank discovers that the Trust's registration with the Charity Commissioner has expired and not been renewed. What should the bank do regarding the presented cheque and ongoing account operation?
- 1The bank must pay the cheque directly to the Charity Commissioner.
- 2The bank should honor the cheque signed by P and ignore the registration status.
- 3The bank should return the cheque signed by P because his authority ceased upon resignation and record update, and mandate operations should be held until valid authority and registration compliance are established.✓
- 4The bank should pay the cheque signed by P as it was dated when he was an active trustee.
Correct answer
The bank should return the cheque signed by P because his authority ceased upon resignation and record update, and mandate operations should be held until valid authority and registration compliance are established.
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