Question

1) Please summarize The 3 different relationships between Bank and customer in Section 28-2 of the chapter.

2) Distinguish between a cashier's check and a certified check. What advantages and disadvantages do they have to a personal check?

Answer 1

1. The 3 different relationships between bank and customer ;-

a. Debtor /Creditor- when customer opens an account with a bank, customer is creditor and bank is debtor. The reverse is situation when customer takes loan from bank, when bank is creditor and customer is debtor.

b. Relationship of pledge and pledge: when a customer pledges some assets to secure a loan from bank, customer is the pledge and the bank is the pledge.

c. Licensor & Licensee: When the bank offer safe deposit locker facility to a customer, the banker becomes licensor and the customer becomes the licensee.

2. Certified check is issued by a customer but the bank certifies that sign of the customer on the check is genuine & there is sufficient fund in the customer’s account to honor the check. The bank & the customer both are liable for the payment.

A cashier's check on the other hand is issued by a bank itself and bank keeps aside fund to provide for this check. This check is more secure as less chance of forgery is there. Also the bank is solely liable for the payment of cashier's check.