Important circumstances under which a banker will be justified or bound to dishonor a cheque are listed below:
Circumstances
1. If a cheque is not dated [Griffth vs Delton (1940)].
2. If the banker gets notice about the insolvency or lunacy of customer.
ADVERTISEMENTS:
3. If it contains material alteration, that is irregular signature or endorsement.
4. A banker is justified in refusing payment of a post dated cheque presented for payment before its extensible date [Morley is Culverwell 7 M & W 174, 178].
5. If the instrument is incomplete and not free from reasonable doubt.
6. If notice in respect of closure of the account is served by either party on the other.
ADVERTISEMENTS:
7. If it is state that is if it has not been presented within reasonable period.
8. If the customer has credit with one branch of a bank and he draws a cheque upon another branch of the same bank in which either he has account or his account is overdrawn [Wood Land vs. Fear (1857)].
9. By notice of loss of cheque and a banker should not pay a cheque after receiving from the holder notice of its loss.
10. If the customer countermands the payment of cheque, the banker’s duty ceases for payment.
ADVERTISEMENTS:
11. If the authority of the banker to honour a cheque of his customer is determined by the notice of the laters death. Any payment made prior to the receipt of the notice of death is valid.
12. If the garnishee or other legal order from the court attaching or otherwise dealing with the money in the hand of the banker, is served on the banker.
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