Economics · Economy
Consider the following statements regarding the legal relationship between a banker and a customer: Statement 1: The banker-customer relationship is fundamentally a contract where the banker acts as a debtor when the customer has a credit balance, and as a creditor when the customer avails of an overdraft. The debt is only repayable on demand made during banking hours at the specific branch, a principle established in the Joachimson v Swiss Bank Corporation case, meaning the limitation period begins from the demand date. Statement 2: A banker has a statutory right to charge interest on loans and alter floating rates based on external benchmarks like EBLR without individual consent, provided the methodology was disclosed upfront, though guidelines restrict penal interest compounding. Statement 3: The customer owes a duty of care (Macmillan duty) to draw cheques in a manner that prevents forgery/alterations. Which of the following options correctly reflects the truth value of these statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
- 1Statement 3 is incorrect because the customer has no legal duty to draw cheques carefully; the entire risk of forgery always lies with the bank.
- 2Statement 2 is incorrect because banks are now required to get customer consent for every single change in the EBLR interest rates.
- 3All three statements are correct, and Statement 1 correctly highlights that the debt is only repayable on demand, meaning the limitation period begins from the demand date.✓
- 4Statement 1 is incorrect because the limitation period for a bank deposit starts from the date of the deposit and not the date of demand.
Correct answer
All three statements are correct, and Statement 1 correctly highlights that the debt is only repayable on demand, meaning the limitation period begins from the demand date.
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