Contractual Relationships in Law and Practice

Learning objectives

After studying this chapter, you should be able to:

1 Describe the nature of the relationship between banker and customer and the key legal and regulatory issues relating to the terms of the contract between them

2 Understand the legal issues around the operation of bank accounts, including mandates, power of attorney, limitation of actions, appropriation of payments, set-off, and banker’s lien

3 Explain the concept of banker’s duty of secrecy and how it relates to the provisions of the Personal Data (Privacy) Ordinance, including the six principles of data protection

4 Discuss recommended bank practices related to a statement of account or passbook, wrongful dishonour of cheques, and exemption clauses


Many legal issues arise in the course of day-to-day banking operations. Bankers, therefore, need to learn about these issues and be guided by them in order to protect their companies and themselves from liability. In this chapter, we provide an overview of the relationship between a bank and its customers from a legal and regulatory perspective. We discuss the implied terms of the banker and customer relationship relating to a banker’s duty of secrecy, and explain specific legal issues relating to the terms of the contract and the respective rights and duties of the bank and the customer.

References are made to common law, legislation in Hong Kong, guidelines of the Hong Kong Monetary Authority ...

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