Banking · Bank Operations & Account Mandates
In a Joint Account held by X and Y with the operational mandate 'Either or Survivor', a dispute arises. X sends a written notice to the bank stating that the mandate should be changed to 'Jointly' and that no further payments should be made to Y. However, Y approaches the bank with a cheque signed only by Y, claiming entitlement to the funds. What is the legal obligation of the bank in this situation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank should ignore X's notice unless it is accompanied by a court injunction.
- 2The bank should pay 50 percent of the balance to Y and freeze the remaining 50 percent for X.
- 3The bank must stop operations and refuse payment to Y, as the notice from X revokes the mandate for independent operation.✓
- 4The bank must honor Y's cheque because the original mandate signed by both parties is a contract that cannot be changed by one party unilaterally.
Correct answer
The bank must stop operations and refuse payment to Y, as the notice from X revokes the mandate for independent operation.
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