Bank law Essay Example | Topics and Well Written Essays - 1500 words

Bank law - Essay Example It has not derived any benefit from the sale of the said Nursing home for it was applied to payment of credit debts, and even the other creditors were not given any amount. Narni was dependent on this kind of arrangement because the Bank has been honoring the checques drawn over the limit and has not notify it for the dishonor. 2. The Court found that indeed the Bank committed breach of its arrangement with Narni. As deduced from the facts of the case, the acts of the bank in allowing and honoring the cheques drawn way beyond the ceiling despite the fact that there was no sufficient fund in the account of Narni constitutes an implied terms. As gleaned from the records of the case, Narni applied for overdraft facility with the Bank with ceiling of $65, 000 and when it has drawn cheques pending approval of the said application, the Bank honored the cheques even if the account was regularly in debit. When Narni asked for extension of the overdraft to $100, 000.00, the Bank continuously manifested its refusal to grant it, but continued to honor the cheques drawn beyond the limit. This kind of dealings between the Bank and Narni gave rise to implied terms, which the bank is bound. And Narni relied upon this dealing of the Bank that the latter will not refuse to honor the check without giving adequate notice. ... The following the terms are implied as a matter of fact: a). as a result of a course of past dealings between the parties; 2). as a result of custom or trade usage; and 3). to give business efficacy to the contract (Topic 6, n.d.). And for the Court to regard the implied terms as result of past dealing between the parties it must be shown that a). the terms of the collateral contract must not be inconsistent with the terms of the main the term claimed to have been used in past dealings is clearly identifiable. This is most easily done by reference to previous contractual documents; b). The previous dealings were sufficiently frequent and consistent, given the circumstances of the case, to constitute a regular course of dealing; c).the present dealing fits into that course of dealing to the extent that it can reasonably be said that the same terms should be included; d). and there is no conflict between the implied term and the express terms (Ibid.). As regards the situation between N arni and the Bank, the Court correctly held that there was an implied terms between them as a result of past dealing and course of action between them. It has ruled that "that by honouring cheques at a time when the account was well in excess of $100,000 the Bank impliedly extended the overdraft facility to â€Å"a limit of at least $100,000† and further agreed not to dishonour a cheque drawn â€Å"within the limit† without first giving adequate notice." The silence of the Bank regarding the status of the cheques drawn despite lack of funds and the previous dealings it had with Narni wherein it honors the cheques are factors relied by Narni in the conduct of