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1. Duty of Care: The customer is bound to the exercise reasonable care when
drawingcheques to guard against alterations. The banker is not liable for any loss arising if
the customer has failed to exercise reasonable care.
In London Joint Stock Bank v. Macmillan & Arthur, A clerk of M draw a cheque for M?s
is signature and indicating the amount payable as £2 in figures but not in words. M signed
the cheque, the clerk added 2 figures to the two to make it £120 and stated the amount in
words. The customer subsequently sued the banker for the loss. It was held that the bank
was not liable as M had failed to exercise reasonable care.
2. Notice of irregularities: The customer is bound to notify the banker of any irregularities
affecting the accounts e.g. forgeries or unauthorized which the customer is estopped from
relying on the irregularity.
As was the case Greenwood v. Martins Bank where a husband had noticed that his wife
had withdrawn monies from his account by forging signature but to avoid publicity, he did
not notify the bank. Subsequently his wife shot herself dead. He then notified the bank of
the irregularities. The House of Lords hold that the bank was not liable as the customer
had failed to notify if of the irregularity. He was stopped from relying on it.
sharon kalunda answered the question on April 12, 2019 at 13:56
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