COMMERCIAL SUPPLEMENT

Abstract

F wished to buy from T a company called T Ltd. For this purpose F formed the plaintiff company to buy out T Ltd. C and D were appointed directors of the plaintiff company and D was also secretary. T introduced F to his bank manager who gave F the necessary forms to enable the plaintiff company to open a bank account with a mandate to sign cheques. F forged the signatures of C and D on these forms and handed them back to the bank so opening an account in the name of the plaintiff company. A formal agreement was then made by which T Ltd. sold the business to the plaintiff company. F forged the signatures on the agreement on behalf of the plaintiff company. Subsequently F forged the signature of the secretary of the plaintiff company to about 80 cheques and obtained about £9,000 of the money which came in from T Ltd.'s business. A winding up order was made against the plaintiff company and the liquidator brought an action in the company's name against the bank claiming that the forged cheques which the bank had honoured were moneys received to the use of the plaintiff company or alternatively that the bank were the bankers of the plaintiff company and were in breach of their duty to take reasonable care. Held: (i) there never was a valid contract for sale between the plaintiff company and T Ltd. and the moneys therefore always belonged to T. Ltd; (ii) there was no relationship of banker and customer between the plaintiff company and the bank.

Citation

(1966), "COMMERCIAL SUPPLEMENT", Managerial Law, Vol. 1 No. 1, pp. 414-416. https://doi.org/10.1108/eb059581