BANKERS RIGHT

RIGHT OF GENERAL LIEN RIGHT OF SET-OFF BANKERS RIGHT OF APPROPRIATION (Claytons case) RIGHT TO CHARGE INTEREST,INCIDENTAL CHARGE ETC.

RIGHT OF GENERAL LIEN

One of the important rights enjoyed by a banker is the right of general lien Lien means the right of the creditor to retain the goods and securities owned by the debtor until the debt due from him is repaid.

There are two types of Lien; 1. Particular Lien 2. General Lien A Particular Lien is so called because it confers a right to retain the goods in connection with which a particular debt arose. A General Lien gives a right to a banker to retain the goods not only in respect of a particular debt but also in respect of the general balance due from the owner of the goods to the person exercising the right of lien.

Banker Right of General Lien

1. The right of general lien on all the goods and securities entrusted to him in his capacity as a banker and in the absence of a contract . a. the goods and securities have been entrusted to the banker as a trustee or an agent of the customer b. a contract express or implied exits between them. 2. A Bankers Lien is Tantamount to an Implied Pledge

3. The right of Lien can be Exercised on goods or other Securities Standing in the name of the Borrower only and not jointly with others.

Exceptions to the Right of General Lien

The right of lien cannot be exercised in the following circumstances: Safe Custody Deposits Documents Deposited for special purpose Security Left with the banker negligently Security held in Trust The banker cannot enforce his right of general lien in respect of goods and securities, which has not been given to him as surety for a loan.

Right of Set Off

The right of set-off can be exercised subject to the fulfillment of the following conditions: 1.The account Must be in the same Name and in the Same Right. 2. The Right Can be Exercised in Respect of Debts Due and not in respect of future debts or contingent debts. 3.The Amount of Debts must be certain. 4.The Banker may Exercise this Right at his Discretion. 5. The banker has right to Exercise this Right before the Garnishee order is made Effective.

Bankers right of appropriation

When a customer has more than one loan account with the banker and the customer makes payment, which is insufficient to discharge the loan, due by the customer there arise the problem of appropriation of payments by the customer.

Claytons Case:
The rule in Claytons case is applied in certain cases only, Neither banker nor customer either of them must not have any choice of appropriation of the payment then the rule is applicable. The case is applicable to various accounts of the same customer if it is treated as one and where the customer has the same right in all such account. The rule applies only to the unbroken account, thus the rule is not applicable to the broken account.

 Bankers right to charge interest, incidental charges, commission etc