Relationship Between Banker and Customer

Relationship between Banker and Customer

Question 1

"What type of relationship is the banker-customer relationship and what are some of its characteristics."

The relationship between the banker and the customer is very complex in nature, and incorporates various facets that both compliment and clash with one another.

Firstly, the banker-customer relationship is a contractual one that is based upon common law, and the judgements of previous cases. More specifically, the contractual relationship has various characteristics that complicate the relationship.

The foremost characteristic of the relationship is of a debtor/creditor nature.

This means that upon the transfer of possession of chattel, in this case money, the customer becomes the creditor. Under this contractual agreement the creditor has the right to demand payment of the money, under satisfaction of the terms of the contract.

The bank, the debtor, claims ownership of the money, and is then able to use that money at their liberty. However, the debtor is in debt to the customer, and has a contractual obligation to repay that money upon request. Alternatively, in the situation of a loan, the roles are reversed, and the customer then becomes the debtor, as they owe the borrowed money to the bank, the creditor.

In addition to this debtor/creditor aspect of the relationship, there are various legal characteristics to the banker-customer relationship. Including a Bailee-bailor aspect, a trustee, an advisor, and an agent.

Upon depositing the money within the bank, the bank becomes the bailee of goods, the goods being the money. The distinguishing feature that makes the bank a bailee as opposed to the owner of the money is title. Whilst the actual money is in the possession of the bank, the title remains with the customer, or the bailor. Further, when the customer decides to make business with the bank, a fiduciary relationship is somewhat implied. Whilst with...