Question

By virtue of the bank-customer relationship, each party has rights and duties arising from the relationship, per Joachimson v Swiss Bank Corporation [1921]. These rights and duties are based on the contractual relationship of both parties. Explain the following: (i) duty of to exercise reasonable care; (ii) duty with regard to Mareva injunction; (iii) duty to give reasonable notice before closing an account.

Answer 1

1) Duty of to excercise reasonble care

• duty of care is a legal obligation in the tort law
• it is an action in negligence
• it is imposed on an individual that requires standard of reasonable care while performing any acts that could forcebaly harm them
• imposed by the operation of law between individual with no current or direct relationship, which eventually becomes realted by the common law.
• duty of care is considered as a formalization od social contract
• in other words it is an implicit responsibility of the individuals towards others within the society

Mavera injunction

• originated out of an appeal case in the english court in the name of Mavera compania naveira SA v International Bulkcarriers SA
• It is a court order wherin in assets are freezed of the defendants
• in order to avoid the money being dissipitated from pending the outcomes or completion of legal actions in the courts
• it is specifiacally effective over the liquid assets like the money held in banks and financial institution
• this injunction is duty bound by the banks and the financial institutions to freeze or suspend the defendants bank account

Duty to give reasonable notice before closing an account

• reasonably banks can close down an account if there is a breakdown of trust in the banking relationship
• banks have every right to suspend the activity incase of suspectible of fradulent practices, money laundering, cheques kiting,funding terrorism.
• banks have to be very clear before terminating an account.
• according to the courts, banks are entileted to close the account of the client and end the banking relationship at its discretion
• however it is the duty of the bank to send in an information or notice prior to terminating the account and reasoning the termination under the legal procedures