- 20 Marks
POB – LP OCT 2022 – L3 – Q4 – Collecting Bank Duties and Protections in Cheque Collection
A bank collects a stolen cheque for a fraudulent customer, opens an account after clearance, allows withdrawal, and faces a lawsuit from the drawer; questions cover definition of collecting bank, duties, statutory protections, common law defences, and applicability of protection.
Question
As a new Manager at the Edubiase branch of your bank, in the course of your work, your branch has collected a cheque for the account of a customer who turned out not to be the true owner of the cheque. Your Operations Manager did not open the account straightaway but for reasons unknown to you, he told the customer Timothy Ankrah that the bank would not open the account immediately but would only open the account if the cheque of GHC 500,000 the prospective account holder presented was cleared. After the cheque had cleared, your Operations Manager proceeded to open the account and the very next day, Timothy withdrew an amount of GHC 400,000.00 which he claimed was for the purchase of a car.
It transpires that the cheque had been stolen and Timothy was only an impersonator. Timothy is nowhere to be found.
The drawer of the cheque Mr. Banson has sued the bank for refund of the monies he has lost.
(a) What is a collecting bank? [2 Marks]
(b) Mention three duties of a collecting bank. [3 Marks]
(c) Mention and explain the statutory protection available to a collecting bank that collects a cheque for a party who is not the true owner of the cheque? [9 Marks] (d) What are the common law defences available to a collecting bank? [4 Marks]
(e) Will the bank be able to avail itself of the statutory protection? [2 Marks]
[Total marks:20]
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