FOR THE LOVE OF CHRIST JESUS; THE BEGINNING AND THE END.

TABLE OF CONTENTS
LAW OF BANKING AND INSURANCE PART I AND II.
DEFINITION OF A BANK.
DISTINGUISHING A BANK FROM OTHER SIMILAR ENDEAVOURS
BRIEF HISTORY.
BANKER AND CUSTOMER RELATIONSHIP NATURE, SCOPE, IMPLICATION,
RIGHTS AND OBLIGATION, JURISDICTION OVER BANKER-CUSTOMER
DISPUTES, AND REGULATION.
WHEN CAN A CHEQUE/WITHDRAWAL ORDER BE DISHONOURED?
REGULATION OF FOREIGN EXCHANGE.
THE CENTRAL BANK OF NIGERIA (CBN); FUNCTIONS, CONSTITUTION,
TOOLS OF MONETARY CONTROL, ETC.
THE BANKS AND OTHER FINANCIAL INSTITUTIONS ACT (BOFIA); AN
EXTENSIVE (BUT SUCCINCT) EXAMINATION OF CERTAIN ESSENTIAL
PROVISIONS.
FAILED BANKS AND BANK EXAMINATION.
THE NIGERIA DEPOSIT INSURANCE CORPORATION NDIC. JUSTIFICATION,
CONSTITUTION, FUNCTIONS, ETC.
NEGOTIABLE INSTRUMENTS. BILL OF EXCHANGE. CHEQUES.
PROMISSORY NOTES.
PART II.
LAW OF INSURANCE.
HISTORY
NATURE, CHARACTERISTICS AND DEFINITION OF INSURANCE.
PARTIES TO THE CONTRACT OF INSURANCE.
INSURABLE INTEREST IN LIFE INSURANCE.
FORMATION OF THE CONTRACT OF INSURANCE.
THE DOCTRINE OF UTMOST GOOD FAITH UBERRIMAE FIDEI.
INSURANCE INTERMEDIARIES.
WARRANTIES AND CONDITIONS.
 INTERPRETATION/CONSTRUCTION OF INSURANCE POLICIES.
RISK AND CAUSATION.
ASSIGNMENT
SETTLEMENT OF INSURANCE CLAIMS.
SUBROGATION.
CONTRIBUTION AND DOUBLE INSURANCE.
MOTOR VEHICLE INSURANCE.
SETTLEMENT OF INSURANCE CLAIMS UNDER THE INSURANCE ACT.
STATUTORY REGULATION OF INSURANCE BUSINESS.

LAW OF BANKING AND NEGOTIABLE INSTRUMENT.

DEFINITION OF A BANK.
:: There is no all-encompassing definition of a bank. However, it is necessary to embark
upon the herculean task of defining a bank considering the various statutory rights, duties
and obligations attached to a bank. for example the obligation to be duly registered and
licenced to carry out banking operation imposed by Section 2 of the BOFIA.
:: By Section 2 of the Bills of Exchange Act 1990 it is a body of persons incorporated or
not who carry on the business of banking (a similar definition is provided under Section 2
of the Evidence Act).1
:: Section 43 of the Banking Act: defines a bank as any person who carries on banking
business. It goes further to define banking business as the business of receiving monies…
granting loans… acceptance of credits, bills, cheques, purchase and sale of securities… and
others as the minister may designate… Same definition of banking business is provided
under Section 66 of the Banks and Other Financial Institutions Act.
:: In UDT V Kirkwood, the court noted that a bank accepts money, honours cheques, and
keeps accounts. Lord Denning noted that he who does not do these is not a banker2.
:: Dr Hart: defines it as a person or company carrying on the business of receiving monies
and honouring cheques for customers. A Similar definition was given by Sir John Paget3.
:: Horace White: notes that a bank is a manufacturer of credit.

1
This definition fails to define “banking business”. Also, a bank must be incorporated and licenced to operate
in Nigeria- Section 2 BOFIA.
2
This definition seems restrictive to the functions of commercial banks.
3
This definition focuses on the commercial bank.
 :: Wordweb dictionary defines it as a financial institution which collects deposits and
channels it towards lending activities.
:: Harry G Brown notes that essentially, a bank acts as an intermediary between the surplus
spenders (depositors) and deficit spenders (borrowers). Also noted that it is a departmental
store of financing.
There are a thousand and one definitions of a bank. However, we can observe that the
combined interpretation of the various definitions of a bank would reveal that:
1. Essentially, a bank receives deposits, grants loans and honours cheques.
With the evolution of commerce and the facilitative effect of technology and
communication, banks also:
2. Deal in shares, debentures, treasury bills, bonds and other kinds of investments.
3. Deal in negotiable instruments like bill of exchange, promissory notes and so on- Woods V
Martins Bank.
4. Provide financial advice to customers4.
5. Buy and sell foreign exchange.
6. Act as agents of their customer in nearly all financial transactions like periodic subscriptions,
bill payment, online shopping, and so on. This has been facilitated by the use of credit cards,
debit cards, ATM cards, Mobile banking, Quickteller and so on.
7. Banks perform other functions which the CBN governor may direct.
The court has noted in Banbury V Bank of Montreal that the limits of a bank’s business
cannot be laid down as a matter of law5. An all-encompassing definition may be impossible.
DISTINGUISHING A BANK FROM OTHER SIMILAR ENDEAVOURS
MONEYLENDING: A moneylender is someone who lends money at an interest. Unlike a
money lender, a bank diversifies into various commercial spheres. The Moneylenders Act
does not apply to a banker- Ojikutu V Agbomagbe Bank Ltd, as in this case, the banker was
not obliged to obey the 15 percent interest ceiling imposed by Section 13 of the Money
Lender’s Act because he was not engaged in “moneylending” but banking.
A SAVINGS ORGANIZATION: Savings organization collects money from its
members/customers for saving. Although a bank does same, it diversifies into other various
fields. In AG Federation V Umoh Ekpa, the appellant was charged for operating banking
business without a valid licence. The court held that he merely collected money from market
women and deposited same into the bank. He was a daily collector and not a banker. The
appellant’s charge for operating without a valid banking licence was quashed.

4
As was evident in Hedley Byrne V Heller and Partners Co.
5
In practice however, it should be noted that the CBN Act, BOFIA and other enactments limit banking business
in Nigeria to some extent.
 INSURANCE BUSINESS. Is not the same as banking business. Just like “banking” there is
no widely accepted definition of insurance-Medical Defence Union V Department of
Trade. In Prudential Insurance Co V Inland Revenue Commissioners, it was seen as an
agreement to pay a sum of money upon the happening of an uncertain event after the
payment of consideration (called premium). A contract whereby the insurer agrees to
indemnify the insured against loss upon the happening of an event after the payment of
consideration called premium.-Charles Chime V United Nigeria. From the definition of a
bank above, they do not really seek to guard against an uncertain occurrence or risk.
Moreover, they are regulated by different Statutes.
BAILMENT: Bailment involves where the bailor gives the Bailee his property for a
particular purpose (usually for temporary keeping) on the understanding that it shall be
returned once the purpose has been fulfilled. The Bailee should keep the property in good
conditions. A bailor is generally precluded from dealing with the property bailed. A bank on
the other hand can deal with the cash deposited through lending, acquisition of properties
and other transactions. Provided it can pay the customer on demand.
:: To qualify as a bank, “banking” has to form a substantial part of the business 6.
In conclusion, Lord Denning once remarked that it is easier to identify a bank than to define
it.
BRIEF HISTORY.
:: Ancient civilisations like Babylon made loans from their temple’s treasuries as early as
2000 BC.
:: The Early Goldsmiths of 17th century took deposits of gold and coins from individuals and
merchants for safekeeping as private storage was fraught with uncertainties. The depositor
was given a claim slip which he would be required to supply when he wishes to collect his
gold coins back. Subsequently, the goldsmiths began to lend the coins in their possession
provided the holder of a claim slip was paid on demand.
The Nigerian position.
:: With the advent of the British in Nigeria and the growth of commercial activities… The
Bank of British West Africa (renamed First Bank) was established in 1894 to serve the
needs of the British Colonial Government.
:: In 1912, the West African Currency Board was established to issue and distribute
currency within the region of West Africa. Then followed Barclays Bank (now Union
Bank) in 1917. The first indigenous bank; The Industrial and Commercial Bank was
established in 1929.

6
Which is the business of receiving deposit and providing loans.
 :: Following the Clamour for a people-oriented indigenous bank, various indigenous banks
like; Agbonmagbe bank, Standard Bank, African Continental Bank, Afro-Seas Credit
Bank etc sprang up in the late 40s and early 50s. However, many of these banks failed due
to lack of regulation, dishonesty, inadequate record keeping and unprofessionalism.
:: The failure of these banks had dire consequences on their Nigerian customers and the
Nigerian economy. Hence, the Banking Ordinance was enacted in 1952. It mandated that
a bank’s nominal capital must not be less than £25,000 of which not less than £12,500
(N25,000) is paid up. In the case of a foreign company E100,000 (N200,000). These values
have been increased overtime by the subsequent decrees like the Banking Ordinance of
1958 and the Banking Decree of 1969.
:: In 1958, the Central Bank of Nigeria Ordinance was passed. This established the CBN
to better carry out the functions of the WACB and more.
:: In 1991, the Banks and Other Financial Institutions Decree was enacted. It mandated
that a bank must be properly incorporated and licenced to carry on banking activities.
:: In 1998 Section 1 of the NDIC Act7 established the Nigerian Deposit Insurance
Corporation. The NDIC aims to protect customers (depositors) and enhance bank stability
by administering the Insurance Deposit Scheme. The IDS is a risk control mechanism
which mandates all banks and deposit taking institutions to insure their deposits with the
NDIC-Section 15 NDIC Act. The premiums/monies so insured shall be used to resuscitate
a failing bank or settle depositors of a failed bank.
:: The Universal Banking System was introduced on the 1st of Jan 2000 which sought to
widen the range of services which a bank can offer. Hitherto, banks were classified based
on the range of banking services they offered. For example Commercial, Merchant,
Agricultural Bank, Mortgage bank, Micro-finance Bank, etc. with the introduction of the
UBE, a single bank can offer commercial, mortgage, agricultural, merchant and other
services all at once.
:: In 2005 the CBN mandated that banks must attain a minimum capital of N25,000,000,000.
Many banks failed due to their inability to meet up with the N25,000,000,000 requirement.
:: Over time, various issues and developments have arisen in the banking sector… At
present, the Nigerian banking system consists of the CBN, the NDIC, the Federal Ministry
of Finance and the banking sector regulated by the various Acts. In 2006, NDIC Act was
enacted and in 2007 CBN Act was enacted as revisions of the previously existing statutes.
BANKER AND CUSTOMER RELATIONSHIP.
DEFINITION OF A BANKER AND CUSTOMER.

7
now 2006.
Who Is A Banker?
:: The layman defines a banker as a person that works in a bank. This is CERTAINLY NOT
the legal position.
:: In Akanle V Reginam, the court noted that “banker” refers to the company licenced to
carry on banking business. The conviction of the manager for granting illegal loans was
quashed on the ground that the banker rather than the manager ought to have been sued since
the banker customer relationship was that of debtor-creditor.
:: Section 2 Bills of Exchange Act 1954 defines a banker as a body of persons whether
incorporated or not who carry on the business of banking. This definition is faulty as Section
2 of the Banks and Other Financial Institutions Act makes it a condition precedent for
persons carrying on banking business to be incorporated.
:: By Section 2 of the Evidence Act, a person, partnership or company carrying on the
business of banking. Similar definition given by Section 41(1) of the Banking Decree.
:: A banking business has been defined in Section 66 BOFIA as the business of receiving
monies… granting loans… acceptance of credits, bills, cheques, purchase and sale of
securities… others as the minister may designate.
Therefore, a banker refers to a company that has been incorporated and licensed to carry on
banking business. E.g. Stanbic IBTC, GTB, UBA and so on.
Who Is A Customer?
:: In ordinary terms, he is regarded as a person buying the goods or employing the services
of another. It is however important to know the strict legal meaning of a customer in order
to decipher whom the bank legally owes a duty.
:: In Ladbroke and Co V Todd, the court held that to qualify as a customer, one must have
an account with the bank. Same position was followed in Commissioners of Taxation V
English Scottish and Australian Bank, where it was held that duration was irrelevant
provided there was an account with the bank. In Woods V Martins Bank, the court noted
that a finalised agreement to open an account could suffice notwithstanding that no actual
deposit has been made. In Robinson V Midland Bank, where A opened an account in B’s
name. The court held that the banker-customer relationship was between A and the bank
notwithstanding that the account was opened in B’s name since the bank only knew A. In
Great Western Railway Company V London and County Banking Co, one Huggins had
been cashing cheques over the counter at the defendant bank for almost 20 years. The court
held that since Huggins had no account with the bank, he was not a customer. Similarly, in
Ademiluyi and Lamuye V ACB, A and B (prominent members of a ruling party; NCNC)
opened an account with ACB. ACB believed that the account was opened on behalf of
NCNC whom they regarded as their customer. “A” sought to cash money from the account
 but NCNC countermanded the cheque. The court held that the countermand by NCNC was
ineffective because the banker-customer relationship existed only between ACBank and
AandB who were the account holders.
A SHIFT IN POSITION: The cases of Hedley Byrne Co V Heller and Partners and
Agbonmagbe Bank V CFAO Ltd the courts drawing from the decision of Donoghue V
Stevenson, have held that a bank can be liable in negligence to a person notwithstanding
that he does not have an account with the bank so long as it is reasonably foreseeable that
they shall be affected by the bank’s negligence.
In conclusion, every case must be determined on its own merits. The courts may impose a
duty of care on a banker depending on the nature of the transaction and the demands of
justice and equity notwithstanding that a person does not have an account with the bank.
NATURE OF BANKER-CUSTOMER RELATIONSHIP
The earliest banking with goldsmith seemed like bailment8 until the goldsmiths realised that
the coins could be lent out. After concluding that a banker-customer relationship exists, the
next question to ask is: how should such relationship be regulated? What are the rights and
obligation of the parties based on their relationship?
1. It has generally been accepted that they stand in a debtor-creditor relationship.
- Where the bank receives deposits of cash from the customer. (Here the bank is the debtor of
the customer and should pay on demand).
- Where the bank loans money to its customer. (Here, the banker is the creditor and the
customer is the debtor).
In Foley V Hill, the appellant claimed that his bank should render accounts and profits on
how his money was being used. lord Cottenham noted that the relationship is debtor-
creditor rather than bailment. To this effect, the bank can utilise customer’s money without
prior permission of the customer… subject to the condition that it shall be repaid on demand.
The court in Joachimson V Swiss Bank Corporation followed the above position… Atkin
J added that the bank should only pay on demand during working hours and in the branch
of initial payment (technology now makes payment flexible). The customer owes a duty to
take proper care in executing his order so as not to mislead the bank or facilitate forgery.
The debtor-creditor position has also been maintained in the following cases: Osawaye V
National Provincial Bank Ltd; Carr V Carr; Sims V Bond, Yusuf V Co-operative Bank
Ltd to mention a few.
Little wonder Lord Goddard once said that the only person that has money in a bank is the
bank itself.

8
Where the owner of gold coins keeps them in the possession of the goldsmith.
 Due to the intricacy and diversity of banking business the following relationships may arise:
2. Bailment: where the bank accepts an item (like certificate) for safe custody.
3. Agency: The bank is regarded as an agent where it collects cheques for and on behalf of
its customers-Agbonmabe Bank V CFAO… Where it buys shares, treasury bills and the
likes for and on behalf of its customers-Hall V Fuller.
4. Fiduciary relationship: In Hedley Byrne V Heller and Partners Co, the court noted that
the bank would be regarded as being in a fiduciary relationship where it gives advice to
customers with the knowledge that it is being relied upon. A fiduciary duty may also be
construed in other deserving circumstances.
4. Trusteeship/Executorship: where the bank executes a person’s will or is asked to
administer trust property. The trusteeship/executorship relationship could exist.
IMPLICATIONS OF BANKER CUSTOMER RELATIONSHIP.
Here we are looking at the various rights and obligations which flow from the banker-
customer relationship.
According to Lord Atkin in Joachimson V Swiss Bank Corporation; the bank undertakes
to receive money and pay on demand while the customer on the other part should take care
in executing his orders so as not to mislead the bank or facilitate forgery-.
Duties of the Bank.
1. To collect deposits: of cash, valuables, cheques and the likes from, for and on behalf of
customers-in Dike V ACB ltd, the bank was compelled to collect deposit from the customer
being its duty.
2. To pay on demand and honour customer’s cheques: Generally, a bank should not
dishonour its customer’s cheque or demand (Conditions for a dishonour shall be discussed
later). A wrongful dishonour may amount to a breach of the contractual relationship-
Marzetti V Williams entitling the customer to damages. In Roline V Steward, the court held
that damages is presumed where the customer is a trader. In Ejimofor V UBN however, the
court held that delay in payment without more would not amount to wrongful dishonour. In
this case, the customer payee got impatient and left after waiting for several hours in the
bank. The court held that the delay by the bank does not necessarily amount to a dishonour.
The duty to pay on demand does not prevent the bank from making enquiries and exercising
due care and skill before making the payment-Karak Rubber co V Burden and Others.
3. Duty of secrecy: to treat its customer’s information and affairs as private and strictly
confidential. The right of privacy is preserved by Section 37 of the 1999 constitution
subject to certain legal justifications.
 In Tournier V National Provincial Bank, the banker disclosed certain confidential
information9 relating to the customer’s account and credit worthiness. The customer’s
employers acted on the information and refused to renew his employment. The court held
that the defendant bank had failed in their duty of secrecy and were liable to pay damages.
The duty of secrecy shall be dispensed with/ignored in the following situations:
 Legal compulsion: Section 45 of the 1999 constitution provides for derogation on
reasonably justifiable law. Section 7 Bankers Books Evidence Act 1879 empowers the
courts to order for the inspection of a bank’s books of account, may be for judicial evidence
or other legitimate need to disclose. The CBN Act and BOFIA also contain certain
provisions for the inspection of bankers books and information in the interest of investors
and the public.
 For overriding public interest. like during war where customer is suspected to be dealing
with enemy. Section 45 of the 1999 constitution allows for certain derogations.
 Where disclosure is made with the express or implied consent of the customer.
 Where the interest of the bank requires disclosure. For example where it is suing the
customer on an overdraft.
4. To inform the customer on developments and (or) suspicious activity in relation to his
account.
5. To act as collecting banker10 to the customer: receive all amounts payable to the customer
and clear with other banks. The account of the customer shall be credited to that effect. The
banker should act expediously-Foreman V Bank of England.
6. To exercise due care and skill-Agbomagbe Bank V CFAO. Hedley Byrne and co V Heller
and Partners Co. In Imersel Chemical Co ltd V National Bank of Nigeria Ltd, the
plaintiffs, relying on the statement of the bank (that the defendant was credit worthy)
suffered some detriment in dealing with the defendant. The court held that this could be
actionable negligence. In Woods V Martins Bank, imprudent advice given by the manager
of the bank to a customer grounded liability.
7. To give reasonable notice before closing the customer’s account.
Rights of a bank.
1. To use deposited money without seeking approval from the customer-Joachinson V Swiss
Bank Corporation.
2. To charge interest on credit facilities.
3. To refuse a payment order where there is a legal or reasonable justification. (shall be
discussed later).
4. To obtain reimbursement from customer for reasonable expenses incurred on his/her behalf.
5. To exercise a right of lien over the customer’s property in its possession.

9
That the customer’s account was overdrawn and he was suspected of betting.
10
A bank which receives a cheque on behalf of its customer for clearing and collection before placing the
value on customer’s account.
6. Combination of accounts: right of a bank to generally retain a credit balance in a customer’s
account against a debt due to the bank from the customer’s other account. Provided the debt
is due-Co-operative Bank V Joe Golday Co. ltd. Although there has been several arguments
against this right. Mr A has two bank accounts in ACB. His first account is overdrawn (owes
the bank 1million), the other account has credit (2million). The bank can refuse to pay more
than 1million from the second account.
Duties of a Customer.
1. To seek out the bank whenever he wants to withdraw his money rather than the bank to seek
him out.
2. To draw his cheque (or make his withdrawal order) with due diligence and care so as not to
facilitate misrepresentation or fraud-Joachimson V Swiss Bank Corporation. In London
Joint Stock Bank V Macmillan and Arthur, a cheque (E12) was drawn payable to the bearer
and the amount in words was not written. The clerk altered the cheque to show E120 (by
adding a “0” behind the E12) and reflected same in words. Held that the customer was not
careful in drawing his order as his failure to stipulate the amount in words facilitated the
fraud.
Although the customer is to exercise due care in making his order, he may not be liable
where the cheque book, seal, stamp and other items that can give the forger access to the
customer’s money is used. In Bank of Ireland V Evans Charities Trustees, the secretary of
the defendants used their seal (which was in her possession) to forge a cheque. The court
held that the customer was not liable. In Kepitigalla Rubber Estate V National Bank of
India, a secretary forged the signature of the customer on cheques. The bank cashed the
cheque. The court held that the customer was entitled to a refund. Same position was
followed in Nigerian Advertising Services Ltd V U.B.A ltd upon similar facts. It all depends
on the facts of each case.
3. To inform the bank of any suspicious dealings in his account which comes to his knowledge.
Failure may translate into acquiescence and may estop a customer from claiming refund or
reliefs in the event of any loss resulting therefrom-Brown V National Westminster Bank
Ltd. In Greenwood V Martins Bank, the appellant discovered that his wife was in the habit
of obtaining money from his account by forged cheques. Eight months after this discovery,
he sought to recover all the monies obtained by his wife through the forged cheques. It was
held that since he delayed for 8 months before informing the bank of such, his action for
recovery should fail.
4. To repay borrowed funds with reasonable interest and re-credit his account where overdraft 11
facilities have been granted to him. In Ojikutu V Agbonmagbe Bank, the customer noted
that the interest rate was arbitrary. The court noted that this cannot excuse the customer from
repaying the loan.

11
Where a customer withdraws more than what he had put in his account with the permission of the bank.
5. To ensure that his account is in credit to meet cheques and other payment instructions.
RIGHTS OF THE CUSTOMER.
1. The right to have his deposit accepted by the bank: the courts, in Ladbrooke V Todd, and
the case of Joachimson V Swiss Bank Corporation (Per Lord Atkin) have noted that a bank
must collect deposits of cash and cheques from its customers.
2. Appropriation of Payment. This is the right of the customer (who has more than one account
with a bank) to choose the account that would be credited by his deposit-Bradford Old Bank
V Sutcliffe.
3. Right to be paid on demand.
4. Right to obtain information relating to his account. Like balance, statement of transactions
that have occurred on his account, and so on.
TERMINATION OF BANKER-CUSTOMER RELATIONSHIP
The banker-customer relationship may be terminated by:
- Mutual agreement between the banker and the customer. Provided obligations on both sides
have been performed (like repayment of overdraft).
- Death of customer. Section 75 BOEXAct.
- When the banker is notified of the customer’s insanity-Younge V Toynbee.
- Where the customer is adjudged bankrupt, withdrawal requests from the account would be
dishonoured. Conversely, where the bank is wound up, the NDIC then takes control to couch
the effect of failure… during this period, the banker customer relationship would be
suspended.
- The outbreak of war keeps the relationship in abeyance12.
JURISDICTION OVER BANKER-CUSTOMER DISPUTE.
What court has the jurisdiction to entertain disputes between a bank and customer?
:: The Federal Revenue Act 1973 stipulated the jurisdiction of the FHC (then FRC) but the
1979 constitution failed to succinctly stipulate the jurisdiction of the FHC.
:: Luckily, the 1999 Constitution clearly enumerated the jurisdiction of superior courts.
For the sake of this topic, only Section 251(1D) and 272 of the 1999 Constitution are
“really” relevant.
Section 251 provides:
(1) Notwithstanding anything to the contrary contained in this Constitution and in addition to
such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the

12
The relationship is on hold. Till the war ceases.
 Federal High Court shall have and exercise jurisdiction to the exclusion of any other
court in civil causes and matters-
(D) Connected with or pertaining to banking, banks, other financial institutions, including
any action between one bank and another, any action by or against the Central Bank of
Nigeria arising from banking, foreign exchange, coinage, legal tender, bills of exchange,
letters of credit, promissory notes and other fiscal measures:
Provided that this paragraph shall not apply to any dispute between an individual customer
and his bank in respect of transactions between the individual customer and the bank;
Section 272 provides:
(1) Subject to the provisions of Section 251 and other provisions of this Constitution, the High
Court of a State shall have jurisdiction to hear and determine any civil proceedings in which
the existence or extent of a legal right, power, duty, liability, privilege, interest, obligation
or claim is in issue or to hear and determine any criminal proceedings involving or relating
to any penalty, forfeiture, punishment or other liability in respect of an offence committed
by any person.
:: The court in ACB V Jamal Steel Structures was of the opinion that since the High Court
has unlimited jurisdiction, it has jurisdiction over banker-customer disputes. Similar position
was maintained in Federal Mortgage Bank of Nigeria V NDIC where the court noted that
banker-customer disputes go to the High Court.
The court gave a sound interpretation of the above Sections in the case of NDIC V Okem
Enterprises thus: By Section 251; the FHC shall have exclusive jurisdiction in matters
relating to banking. Except the matter relates to an issue between a customer and his bank.
In essence, both the FHC and HC can entertain banker-customer disputes13. Then other
banking disputes14 are within the exclusive jurisdiction of the FHC. In other words, the FHC
exclusively entertains all banking disputes (CBN versus First Bank, UBA versue Stanbic
IBTC, and so on). But when the dispute is one between a bank and its customer, then both
the FHC and HC can adjudicate.
In Europe the judicial ambivalence has been settled by the Financial Ombudsman Scheme
2000. Nigeria needs legislative intervention because the Supreme Court may overrule the
sound decision of NDIC V Okem Enterprises.
WHEN CAN A CHEQUE/WITHDRAWAL ORDER BE DISHONOURED?
1. Insufficient Funds in the customer’s account to meet the demand-In Osawaye V National
Bank for Nigeria and in the case of Savannah Bank V Salami, the Supreme Court noted
that where the amount standing in the customer’s account is not up to the amount sought to
be withdrawn, the bank can dishonour the cheque.

13
Thus FHC and HC have concurrent jurisdiction in banker-customer disputes.
14
Like that between a bank and another bank or where the CBN is a party to the case.
2. Legal Impediment to the grant: like, where there is an ongoing police investigation on the
account or where the court has ordered that the account should be frozen. This was done by
the magistrate court in International Bank of West Africa V Kennedy Transport (Nig) Ltd.
See also Osawaye V National Bank for Nigeria.
3. Irregularity on the face of the cheque: like unsigned alteration, discrepancy between
words and figures, where signature differs from bank’s specimen and other suspicious
circumstances which necessitate further investigation by the bank to forestall fraud.
4. Where the customer is declared bankrupt or on the other hand, the bank is wound up.
5. Where the cheque is stale15 or Post-dated16.
6. Effective Countermand: a countermand is simply regarded as “an order cancelling a
previous order”. Occurs where the customer clearly instructs the banker not to pay a cheque
drawn on his account. For example, Mr A draws a cheque instructing NISBank to pay Mr B
the sum of N100,000. Mr A later calls/contacts NISBank and instructs them not to cash the
cheque (not to pay Mr B). This instruction must reach NISBank before encashment… i.e.
before the amount is paid to Mr B. In Ademiluyi and Lamuye V ACB, (discussed earlier)
the court held that only a customer can give an effective countermand payment from his
account.
7. Where the bank has notice of the customer’s death or mental disorder-Younge V Toynbee-
when the notice reaches the banker it can generally dishonour withdrawal requests.
8. Where the account does not exist or has been closed by the customer.
REGULATION OF FOREIGN EXCHANGE.
Currency, being a manifestation of a state’s sovereignty differs from one state to another.
Foreign exchange entails conversion of one currency to another based on the current value
(exchange rate). In simple terms; foreign exchange entails the buying and selling of
currencies.
HOW DID FOREIGN EXCHANGE COME ABOUT IN NIGERIA?
Foreign exchange was necessitated in Nigeria by the following:
- Colonial rule and contact with the West.
- Expansion of trade and commerce between Nigerians and foreigners.
- The establishment of the CBN in 1958 to issue and distribute the Naira.
- Exportation of agricultural and petroleum produce. Payment was (and still is) made in
foreign currency.
The Nigerian Stock exchange was founded in 1960 17.

15
Presented more than six months after the due date.
16
Immature for payment. Where the cheque would be payable at a future stated date. Presenting it before the
stipulated date means it is immature.
17
Although it was known as the Lagos Stock Exchange. It was not until 1977 that it became known as the
Nigerian Stock Exchange.
 By Section 1(2) and 8 of the Foreign Exchange (monitoring and Miscellaneous
Provisions) Act 1995, the CBN issues guidelines, monitors and supervises the operations
of the market. The Security and Exchange Commission is the regulatory body.
HOW HAS FOREX BEEN REGULATED IN NIGERIA?
The following Enactments have regulated the Foreign Exchange Market in Nigeria:
- :: The Exchange Control Act, 1962: which aimed to protect and conserve financial
resources.
- :: The Foreign Currency Domiciliary Decree 1985: which facilitated the liberalisation of
the foreign exchange market.
- :: The Second-Tier Foreign Exchange Market Decree (now Act) 1986 (SFEM).
Established to meet with increased demand for foreign exchange following the increased
exportation of petroleum. Some salient features of this decree include:
 The exchange rate allocation was to be based on market forces.
 The Bureau De Change18 was introduced in 1989 to broaden the market and accommodate
privately sourced foreign exchange.
Following the volatility in the rates and the need to regulate the market, further reforms were
carried out in 1994. For example; Foreign exchange was centralised in the CBN, the Bureau
De Change was regarded as the CBN’s agent in buying foreign currency. It was reiterated
that the black market was illegal.
- :: Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995: this is the
current one. The salient features of this Act include:
 It further liberalised the Foreign Exchange market.
 Section 1 established the (AFEM) Autonomous Foreign Exchange Market which enabled
authorised dealers to sell to end-users in accordance with the provisions of the Act.
 Introduction of the Inter-bank Foreign Exchange Market (IFEM) in 1999 which enabled
authorised dealers, sellers and the public to transact. (See Section 7 FE(MMP)A).
 Bureau de Change were reaffirmed as authorised dealers in the interpretation Section 41.
 Section 3 protected those that dealt in foreign currency by providing that a dealer shall not
be compelled to disclose the source of his foreign currency.
 Section 4, listed certain authorized sources of forex in Nigeria viz: currency imported into
Nigeria by: returning citizens, foreign nationals resident in Nigeria, non-oil export proceeds,
those imported by foreigners for transaction, those provided by the CBN amongst others.
 The Act provided that the CBN may appoint authorised dealers and revoke such appointment
in national interest where necessary.
 Section 9 provides that the rate for each transaction shall be that which the purchaser and
the authorised dealer agree upon. This sought to promote freedom of bargaining power.

18
Place for converting currency.
 Section 11 mandates that all dealings must be within the stipulations of the act… the market
should not deal in prohibited goods.
 Section 29 and 30 provides for offences and penalties-Onwuchekwa V NDIC. They
include: Wilful and fraudulent forgery, mutilation, defacing foreign currency, cheques, other
exchange instruments (the punishment provided for the above is 5years or 5 times the foreign
currency involved and licence can be revoked.
In conclusion, the forex environment in Nigeria has undergone various regimes of
sophisticated regulation in Nigeria.

THE CBN.
:: Initially, the West African Currency Board was established to issue currency in the region
of West Africa. However, because the WACB could not control or manage the money stock,
the Central Bank of Nigeria was established under Section 1 of the Central Bank of Nigeria
Ordinance 1958 following the recommendation of Mr Lyone’s report.
:: The CBN is an independent corporate entity with perpetual succession… can sue and be
sued.
:: It has its head office in the FCT. Its authorised capital is N100,000,000,000 (one hundred
billion). The day to day business is run by the Board of Directors which consists of:
- The Chairman.
- Governor and Deputy Governors of CBN.
- Director General of the Federal Ministry of Finance.
- The MD of NDIC.
- Four other members of integrity and professional competence.
:: The tenure for the CBN governor is five years, Directors-3 years. None of these top
officials should be a legislator or officer of any licenced bank.
FUNCTIONS OF THE CBN.
Section 2 of the CBN Act enumerates the major functions of the CBN. All the functions of
the CBN can be summarized into 9 categories from the general intendment of the CBN Act
and other laws.
1. To ensure monetary and price stability: The CBN controls the level of liquidity in order
to ward off inflation. Section 30 of the CBN Act empowers the CBN to carry out open
market operations, issue treasury bills, re-purchase securities and so on… in a bid to manage
liquidity and withdraw money from circulation19.
2. Issue legal tender currency in Nigeria:

19
This may have a reverse effect where the subscribers get their entitlement (i.e. where the treasury bills or
other securities become payable).
- Section 17 of the CBN Act gives the CBN exclusive a
FULL NOTE ON WWW.ISOCHUKWU.COM

LAW OF BANKING AND INSURANCE PART I AND II.

DEFINITION OF A BANK.
DISTINGUISHING A BANK FROM OTHER SIMILAR ENDEAVOURS
BRIEF HISTORY.
BANKER AND CUSTOMER RELATIONSHIP NATURE, SCOPE, IMPLICATION,
RIGHTS AND OBLIGATION, JURISDICTION OVER BANKER-CUSTOMER
DISPUTES, AND REGULATION.
WHEN CAN A CHEQUE/WITHDRAWAL ORDER BE DISHONOURED?
REGULATION OF FOREIGN EXCHANGE.
THE CENTRAL BANK OF NIGERIA (CBN); FUNCTIONS, CONSTITUTION,
TOOLS OF MONETARY CONTROL, ETC.
THE BANKS AND OTHER FINANCIAL INSTITUTIONS ACT (BOFIA); AN
EXTENSIVE (BUT SUCCINCT) EXAMINATION OF CERTAIN ESSENTIAL
PROVISIONS.
FAILED BANKS AND BANK EXAMINATION.
THE NIGERIA DEPOSIT INSURANCE CORPORATION NDIC. JUSTIFICATION,
CONSTITUTION, FUNCTIONS, ETC.
NEGOTIABLE INSTRUMENTS. BILL OF EXCHANGE. CHEQUES.
PROMISSORY NOTES.
PART II.
LAW OF INSURANCE.
HISTORY
NATURE, CHARACTERISTICS AND DEFINITION OF INSURANCE.
PARTIES TO THE CONTRACT OF INSURANCE.
INSURABLE INTEREST IN LIFE INSURANCE.
FORMATION OF THE CONTRACT OF INSURANCE.
THE DOCTRINE OF UTMOST GOOD FAITH UBERRIMAE FIDEI.
INSURANCE INTERMEDIARIES.
WARRANTIES AND CONDITIONS.
 INTERPRETATION/CONSTRUCTION OF INSURANCE POLICIES.
RISK AND CAUSATION.
ASSIGNMENT
SETTLEMENT OF INSURANCE CLAIMS.
SUBROGATION.
CONTRIBUTION AND DOUBLE INSURANCE.
MOTOR VEHICLE INSURANCE.
SETTLEMENT OF INSURANCE CLAIMS UNDER THE INSURANCE ACT.
STATUTORY REGULATION OF INSURANCE BUSINESS.
FULL NOTE ON WWW.ISOCHUKWU.COM