Unauthorised Payment and Unjust Enrichment in Banking Law

Abstract

In the civil law (in the sense of the Roman law based European jus commune) the enrichment action in such cases has sometimes been described as the “extended” actio negotiorum gestorum arising from the unauthorised administration (negotiorum gestio) of the affairs of another. It is generally accepted that the relationship between banker and customer is one of mandate rather than agency. The customer is the mandator and the bank the mandatory. In the case of a current account, there is a general mandate which provides that the bank will accept and pay cheques drawn upon it, subject thereto that the customer has sufficient funds in, or overdraft facilities attaching to, his current account. It is of singular importance to note that the underlying agreement between the customer and the person in whose favour a cheque is drawn is irrelevant for purposes of determining the rights and obligations arising from the mandate agreement between the bank and customer.