LEGAL PRINCIPLE: BANKING LAW — Banker-Customer Relationship — Consolidation of Accounts — Whether a bank can consolidate its customers’ accounts
PRINCIPLE STATEMENT
A banker may consolidate accounts owned by a customer in his own right, unless precluded by agreement, to ascertain the balance. It is different where a banker opens two accounts for a customer, one in the customer's own name and another in a business name or in the name of an incorporated body under his aegis or control.
RATIO DECIDENDI (SOURCE)
Per Uwaifo, JSC, in Joe Golday Co. Ltd & Ors v. Co-operative Development Bank Plc (2003) NLC-1282000(SC) at p. 18; Paras A–C.
"There is no doubt in law that a banker may consolidate the accounts owned by a customer in his own right, unless precluded by agreement, express or implied from the course of business from doing so, in order to ascertain and treat as the balance, the amount standing to the credit of the customer. It is a prudent way open to the banker to assess the financial worth with it of that customer. It is a different thing where a banker opens two accounts for a customer, one in the customer's own name and the other in a business name or in the name of an incorporated body under his aegis or control."
EXPLANATION / SCOPE
A bank may consolidate accounts owned by the same customer. The principle applies to banking law. Consolidation for separate legal entities is different. The rule protects the bank’s right to assess financial worth. The customer may contract out of consolidation. The principle is well-established.
CASES APPLYING THIS PRINCIPLE
None recorded.