Lloyd's Maritime and Commercial Law Quarterly
BANK MANUALS AND INSTRUCTIONS TO STAFF – SOME LEGAL ASPECTS
Dr. W. S. Weerasooria
LL.B. (Hons.), Ph.D. (Lond.), Barrister and Solicitor, Supreme Court of Victoria, Australia. Senior Lecturer in Law, Monash University.
All commercial (trading or cheque paying) banks have manuals containing instructions for the information, guidance and direction of their officers and employees in the conduct of the bank’s business. These bank manuals, which are also referred to as standing regulations and rules, are drawn up by the head office of each bank. They are normally divided into different sections, headings, and captions according to the diverse business activities of the banks. They are amended from time to time as and when necessary and the amendments are notified to the branches by means of circulars. The manuals of the commercial banks operating in the countries of the British Commonwealth, though they have a character of their own, are based primarily on the manuals of English banks, with the necessary modifications to bring out any differences in law (mainly statute law) and practice between the countries.
A major portion of these manuals have been drawn up to facilitate the work of the banks but some of the instructions contained in them, especially those relating to the opening of new accounts and the payment and collection of cheques, have been inserted with a view to prevent the perpetration of frauds — which are on the increase — against the banks by dishonest persons.1
The legal position and effect of these bank manuals have been the subject of judicial discussion and interpretation on more than one occasion. How far do they bind the banks and their officials to a literal performance of the instructions contained in them? Are they mandatory or do they leave room for bank managers and other officials to exercise their own discretion? Will a failure or neglect to conform to and observe the instructions be construed as prima facie evidence of negligence or want of care on the part of the bank? What is the attitude of the Courts towards these manuals? There have been several decisions, which have considered these matters and the banks can profit by knowing the attitude of the Courts towards their manuals.
A bank’s rules are not a legal measure of its liability.
In Lloyds Bank v. E. B. Savory & Co.
2 Lord Buckmaster, referring to bank manuals, said:
1 Lloyds Bank Ltd. v. E. B. Savory & Co. [1933] A.C. 201; Lumsden & Co. v. London Trustee Savings Bank [1971] 1 Lloyd’s Rep. 114.
2 [1933] A.C. 201. See also judgment of the Court of Appeal in [1932] 2 K.B. 122.
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