Stephane issued a cheque in favour of Thorne. However, when Thorne presented it for payment it was dishonoured and returned marked “R.D.”. It now transpires that when the bank clerk was checking on Stephane’s balance he checked on the wrong account and as a result the cheque was dishonoured under a mistaken belief of lack of funds.
Explain Stephane’s rights against the bank. (8 marks)
• This problem is based on the duties or obligations of the banker to his customer.
• In this case there is a banker and customer relationship between the banker and Stephane.
• One of the principal duties of a banker to the customer is to honour all cheques drawn the customer provided other conditions are fulfilled. The banker is also bound to exercise care and skill in his dealings with the customer.
• In this case, it is evident that the banker acted negligently and thus dishonored the cheque.
• Stephane has an action in damages against the banker for breach of duty.