Restitution Discussion Group Archives
| Sender: |
Lionel Smith |
| Date: |
Fri, 11 May 2001 11:16:09 -0400 |
| Re: |
Bank Mandate |
If the question is whether, having
recovered from the payee, the bank could keep both lots of money,
it does not sound right. Surely the indemnity between banker and customer
is just that, an indemnity; the customer promises to indemnify against
loss; once the bank has recovered from payee, there is no loss, and
the bank would have to re-credit the account. The customer might even
have a security interest under Lord Napier & Ettrick. The fax-instruction
indemnity against loss is not the same as authority to debit the account.
It is more like a consensually created estoppel.
I was indeed postulating an evil bank
trying to keep both lots of money. I agree that the loss analysis might
be one way to argue about it, though strictly speaking this is not what
the contract says. The Payor agreed to "irrevocably authorise the bank
to debit the Payor's account immediately with all sums paid by the bank
in respect of such instructions". I have seen indemnity with the same
wording, though wholly unrelated to my hypothetical. Perhaps some sort
of implied term is necessary to achieve the re-credit.
If that is what the fax-instruction agreement says, it
does not seem consistent with the other assumption in the earlier facts,
that the signatory was not authorized. You would have to reconcile the
"normal" contract governing the account, including signing authority,
with this fax-instruction agreement, and if it includes the words above,
surely you would have to say either (1) in respect of faxed instructions
at least, the debit was fully authorized, and the bank did have its customer's
mandate or (2) the words above cannot stand with the other agreement as
to signing authority, and are just another way of expressing the indemnity
nature of the fax-instruction agreement.
LDS
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