Debtor/Creditor Relationship
The relationship is not a principal/agent or trust/trustee relationship; it is a relationship based in express contract.
Foley v Hill: The bank is allowed to co-mingle cash and use it for its own purposes - money in a bank account is not subject to any trust arrangement. The money is repayable to a customer on demand: unlike the general rule where a debtor must seek to repay the creditor, the debtor only pays when the creditor demands it.
The bank can do what it likes with the money that the customer gives it. The customer is merely a creditor of the bank: the bank owes it money, which may be repayable on demand or at call (have to give notice). There’s no trust, so if the bank becomes insolvent the customer will lose all or some of its money.
Foley v Hill 1848: Customer paid money into an account expecting to receive 3% interest per year, but wasn’t paid any for 6 years. He wanted them to give the profit they made on his money. The account of profits was denied: he should have just sued to return the debt. Where money is paid into the account, the bank can do what it likes. Its duty was to repay (when demanded) a sum equivalent to that paid into his hands.
Generally the onus is on the debtor to seek out somebody you owe money to and repay them, but the bank’s obligation is to repay when demanded. This also applies when the customer’s account is overdrawn – the customer waits for the bank to demand repayment rather than seek to pay them the money.
Joachimson v Swiss Bank Corporation 1921: The bank has an obligation only to repay you at the branch where the account is kept and during normal working hours.
Foley v Hill: The bank is allowed to co-mingle cash and use it for its own purposes - money in a bank account is not subject to any trust arrangement. The money is repayable to a customer on demand: unlike the general rule where a debtor must seek to repay the creditor, the debtor only pays when the creditor demands it.
The bank can do what it likes with the money that the customer gives it. The customer is merely a creditor of the bank: the bank owes it money, which may be repayable on demand or at call (have to give notice). There’s no trust, so if the bank becomes insolvent the customer will lose all or some of its money.
Foley v Hill 1848: Customer paid money into an account expecting to receive 3% interest per year, but wasn’t paid any for 6 years. He wanted them to give the profit they made on his money. The account of profits was denied: he should have just sued to return the debt. Where money is paid into the account, the bank can do what it likes. Its duty was to repay (when demanded) a sum equivalent to that paid into his hands.
Generally the onus is on the debtor to seek out somebody you owe money to and repay them, but the bank’s obligation is to repay when demanded. This also applies when the customer’s account is overdrawn – the customer waits for the bank to demand repayment rather than seek to pay them the money.
Joachimson v Swiss Bank Corporation 1921: The bank has an obligation only to repay you at the branch where the account is kept and during normal working hours.