An Important Skill to Acquire is the “Verbal Communication Skill”
Learn Pronunciation, Learn the Language, and Learn the Use of Words.

During group discussions many people never speak up because they are afraid that people will judge them for saying something stupid. This fear is not really justified. Generally, people are much more accepting than we imagine. In fact most people are dealing with exactly the same fears. By making an effort to speak up at least once in every group discussion you will become a better public speaker. You will instill more confidence in your thoughts and will be recognized as a leader by your peers.

1. Handling of Customers in certain circumstances.
2. Powers of attorney / Mandate
3. Safe custody of customer’s valuables and lockers.


Handling of Customer Accounts in the following Circumstances.
1. Countermand of payment (Stop Payment of Cheque)
2. Notice of Customer’s death
3. Notice of adjudication of customer as an insolvent
4) Notice of customer’s insanity
5) Legal orders attaching customer’s account — A garnishee order

{insolvent = a person who is unable to pay his debts as they arise.}

9.1. Countermand of Payment — countermand refers to stopping payment of the cheque by the drawer himself. It usually arises where a cheque is lost or stolen or some dispute begins between the drawer and the payee. It means that the duty and authority of a bank to pay a cheque drawn upon it are ‘determined/terminated’ through “countermand” of cheque. The bank must comply with its principal’s instructions and stop the process if it is practicable. Countermand instructions must be received before it is presented and paid and a cheque presented in clearing can be countermanded until the time fixed as per Clearing House rules for returning an unpaid cheque.

A cheque backed by a guarantee card cannot be countermanded as the customer has undertaken not to countermand as a matter of guarantee card contract. Moreover a customer may be sued by a holder in due course despite countermand of a cheque. (We will study in a later handout as to who is a ‘holder in due course’.) There cannot be a countermand if a cheque is certified by the bank ‘good’ for payment — if such certification is permitted according to local practice.

The countermand will be regarded as effective only if the bank has actual notice of the countermand. In Curtice vs. London City and Midland Bank (1908) the Plaintiff countermanded the cheque by telegram which was delivered after the bank had closed. It was put into the letter box of the bank by the telegram messenger. The staff cleared the box but somehow ignored the telegram. The cheque was presented and paid during the date. The court of Appeal held that the notification of countermand had to actually come to the bank’s notice. The Court held in favour of the bank.

The bank must ensure that the stop payment instructions are genuine i.e. properly signed bearing reference to the cheque being stopped. If such instructions are given over telephone, a caution may be recorded but the customer should be asked to confirm by written instructions. The signatures should be verified and it should be checked from the ledger if payment has already not been made or that such a cheque is not presented on counter for cash payment or has not been received in inward clearing i.e. every possible effort should be made to ensure that the cheque is not in the process of being paid.

Confirmation of acknowledgement should be prepared and sent to the customer. When a cheque marked for stop payment is presented for payment either at the counter or through clearing the same must be returned only after clearly writing on the face of the cheque itself “Payment countermanded by the Drawer”.

In the past, banks, while acknowledging instructions for “stop payment of cheques” from their customers used to issue ‘disclaimers’ for indemnifying themselves against breach of these instructions by declaring that “the bank will not be responsible if the concerned cheque was paid due to rush of work or any other reason”.

The State Bank of Pakistan has taken exception to such disclaimers which negate the very purpose of stop payment instructions and has strictly directed the banks to discontinue issuance of such disclaimers.
{Disclaimer = a statement in which sb., says that they are not responsible for sth.}

9.2. Notice of Customer’s death-
On notice of a customer’s death the duty and authority of a banker to pay a cheque drawn on him by his ‘dead’ customer ceases. Notice means reliable notice. It is not the customer’s death but the notice of the death that revokes the authority. Hence a cheque paid after the death of the customer but before the bank had notice thereof is a valid payment.

The death of a customer cancels the mandate to the banker. It is of no relevance if the cheque is dated well before the date of the death. On receipt of such information and confirmation, the banker should immediately stop all withdrawals including making payments from the deceased’s account.

The payment of a cheque even after the death of the account holder in the absence of any notice or knowledge of such death will not create any liability to the bank. The bank must ensure that the information regarding death is reliable otherwise returning a cheque on the ground of death of the accountholder whereas he is actually alive will create an embarrassing situation for the bank and may lead to claims for damages. Written information by a relative of the deceased, newspaper report or obituary published in the paper can be relied upon to mark the account deceased.

Credits are allowed to a deceased account but no withdrawals are allowed unless and until the legal heirs produce a ‘Succession Certificate’, Probate*1 or a Letter of Administration.
A succession certificate issued by a court of Law is an instruction to a bank to pay the stated amounts to the named heirs.
A Probate is a will made by the deceased that has been certified by a court of law for execution by an executor named by the deceased.

A Letter of Administration is an appointment by the court of an administrator who is ordered to take charge of the estate and distribute it amongst the named heirs as approved by the court. This happens if the deceased has not left any Will. (What is intestate?)
Kindly note that under Islamic Law a person can ‘will’ i.e. leave instructions that his property may be given to persons other than legal heirs only upto the extent of one third of his property. The remaining two thirds cannot be willed and shall be distributed only to the legal heirs as per Sharia.

9.3. Notice of customer’s insolvency — Insolvency means inability to pay or settle ‘just’ debts. (the word ‘just’ here means justifiable) Once an adjudication order is passed deciding that a person is ‘insolvent’, the property of the customer vests in the Official Assignee or Official Receiver. Hence the balance in the account is no more at the disposal of the account holder. The banker should therefore not honour any cheques issued by the customer even if these are dated before the date of such adjudication order.

A creditor (i.e. a lender) can launch (i.e. move) an application in a court of law requesting the court to declare a person insolvent and appoint a receiver if the debtor has committed an act of insolvency. Very briefly the acts of insolvency are:-

A debtor:-
1. Transfers all or a substantial part of his property to a third person with the intent to prejudice his creditors or prefer one above the other.

2. Transfers his property or a part of it with an intention to defeat or delay his creditors;

3. Transfers his property or a part of it which would be void because of fraudulent preference, if he were adjudged an insolvent.

4. If with intent to defeat or delay his creditors:
i. He departs from or remains out of the country
ii. He departs from his residence or usual place of business or absents himself;
iii. He secludes himself with intent to deprive his creditors of the means of communicating with him.

5. Any of his property is sold in execution of the decree of a court for the payment of money;

6. He petitions to be adjudged an insolvent

7. Gives notice to any of his creditors that he has or is about to suspend payment of his debts

8. He is imprisoned in execution of the decree of any court for the payment of money.

Action by bank or receipt of ‘insolvency’ order.
On receipt of information regarding adjudication (meanings : to make an official decision about who is right in a disagreement between two groups or organizations: in other words passing of a legal order.) that the customer of bank is insolvent and an official receiver has been appointed, the banker must inform the Official Receiver or Assignee as to the bank’s position with the insolvent. On instructions from the Official Receiver, the credit balance in the account, if any, and not under lien to the bank, would be transferred to the Official Receiver or Assignee. However if the customer owes debt to the banker, the banker has the right to realize any securities for payment of its dues and if any excess is left, then it may be transferred to the Official Receiver or the Assignee. In case there is a shortfall in recovery of the bank’s dues, the bank may then inform the official receiver accordingly.

9.4. Notice of customer’s insanity As soon as a banker receives information of the customer developing unsound mind or actually becomes insane, it should immediately stop further operation in the account and any cheque even if it is dated with a prior date, should not be paid and if a Lunacy Order has been issued, its contents should be carefully noted.

9.5. Legal orders attaching customer’s account —
Also called A Garnishee Order*
{Garnishment means A legal procedure by which a creditor can collect what a debtor owes by reaching the debtor's property when it is in the hands of someone other than the debtor}
*is an order of the court in favour of a creditor who has obtained judgment against his debtor, attaching for the discharge of his debt, the funds in the hands of a third party, the garnishee. Thus if “A” obtains judgment in respect of a debt owed to him by “B”, “A” may apply to the court for a garnishee order attaching funds on “B”s bank accounts.

Garnishee proceedings comprise two distinct steps. The first is the issue by the court of a Garnishee order ‘nisi’, which attaches the funds in the hands of the garnishee, but gives him an opportunity of appearing before the court to show cause why funds should not be handed over to the judgment creditor. The second step is taken when the order is made ‘absolute’, and the garnishee is ordered to pay to the judgment creditor either the whole of the funds in his hands or enough to satisfy the judgment debt.

When a garnishee order served on a banker attaches all debts “owing or accruing due,” the whole of a customer’s balance on account is attached, although the amount of the judgment debt may be considerably less than the balance standing to the customer’s credit. The result is that, as from the date of the receipt of the order, the balance on the account must not be interfered with in any way by the banker or the customer. But generally garnishee orders issued by courts mention the amount for which the order is issued and the bank will have to only earmark that amount in the account and the account holder will continue to have free access to the amount in excess thereof.

If the bank has any claim against credit balance, the bank will instruct its solicitor to appear at the hearing of the order; for example, a right to set-off against the credit balance on an advance made to the same customer. But the banker is not entitled to set-off a contingent liability, e.g. in respect of a bill discounted for the customer, or L/C opened for the customer but not yet negotiated.

In short a Garnishee Order must relate to a debt which is due or accruing due at a definite date and not a claim that may become due at a future date. It must be:

i. a deposit payable on demand;

ii. a deposit repayable on the fixed expiry of a fixed notice

iii. a deposit repayable at a fixed future date or after the lapse of a specified
time.

A credit balance in a joint account cannot be attached by a Garnishee Order unless it is issued in the joint names. The future debts are also not affected by the Order. Therefore the safe method would be for the banker to open a fresh account for all subsequent transactions. The following steps are required to be taken:

i. mark the date and time of receipt of the Order

ii. trace out the deposits in the name of the person named in the Order

iii. if the entire amount of the balance is attached the balance in the account is encircled and a note be made to the effect that it has been attached.

iv. Exercise the right of set-off if there is any claim of the bank on the customer

v. Intimate the customer about the attachment Order and he is advised not to issue any cheque.

10.9. Power of Attorney
A power of attorney is a document whereby one person —termed the “donor” or “grantor”- gives another person — termed the “donee”,” grantee” or “attorney”--- authority or power to act as agent on his behalf either for a specific purpose or for general purposes. In the former case it is called a Special Power of Attorney and in the latter case, the instrument is called a General Power Of Attorney. Any person having contractual capacity can appoint an attorney to act on his behalf. The companies Ordinance, 1984 permits a company to appoint an attorney for the purpose of executing deeds on its behalf. Such a power must be given under the company common seal of the company. (A company common seal is an embossed mark usually bearing the name and logo of the company. The Articles of association lays down which type of documents issued by the Company must bear the company common seal to be legally valid.)

A power of attorney is commonly used when the grantor is leaving the country for a certain period or is otherwise unable to attend to his business and wishes to authorize someone else to transact business on his behalf.
A banker who is asked to accept authority of an attorney should require a certified copy of the power of attorney to be placed in his hands, and should record details thereof on the customer’s ledger account, in the register of Securities, and in any other place where the information should be available.

The banker should verify that the original power is duly signed, stamped and notarized.
The banker should ascertain exactly what powers the document conveys, and ensure that the authority is still in force and that it has not been revoked. Usually the banker obtains from the attorney a declaration that the power of attorney has not been revoked and the donor is still alive. A power of attorney becomes invalid on the death of the donor.

10.9.1. Purpose covered by Powers of Attorney.
Whether a power of attorney is for a specific purpose only or is ‘general’ the terms of the document must be strictly construed. It means that the Power of Attorney should be very carefully studied to ascertain the powers that have been granted to the attorney.
(Construe = to understand the meaning of a word, a sentence)
In this respect there is an important distinction between an agent appointed by power of attorney and an agent appointed in some other way. Although it is a general rule of law that the acts of an agent are binding on the principal if those acts are within the agent’s apparent authority, this rule does not apply to an attorney. The scope of the authority of a person acting under a power of attorney is contained within the document, and nothing can be read into the document that is not specifically included therein.

For these reasons, a banker who proposes to accept a power of attorney should ensure that any proposed transaction by the attorney is definitely covered by one of the clauses; otherwise, if the strict letter of authority is not complied with, the banker may render himself liable to the grantor for any loss that may ensue. Thus, power “to operate on any banking account, to draw, sign and indorse cheques and dividend warrants” does not imply power to open a new account or accept bills or to make or indorse promissory notes. Again, power to indorse bills of exchange is not authority to discount such bills on behalf of the principal.

Power to operate banking account does not imply power to overdraw from the account. Power to borrow must be clearly given by the instrument, and borrowing must be carried out in the manner and against the securities therein designated, otherwise the banker will have no recourse against the grantor.

The so-called “general clause” or “omnibus clause” in a general power of attorney commonly authorises the attorney to do “all such other acts and things” as the principal himself could do. But the banker cannot regard this as an authority for any act not specifically covered, e.g. borrowing money.

The banker should rather consider this clause in conjunction with the preceding clauses and take it as authority for any acts necessarily incidental to the powers that are specifically mentioned. Even where power of attorney contains an undertaking by the principal to ratify all acts done by his attorney such an undertaking cannot be applied against the principal in respect of any transaction outside the limits of the powers expressly conferred in the instrument.

Where a Power of Attorney(PA) is presented to a bank, it must examine the same and determine:

1. That the PA has been validly executed.

2. It has been witnessed

3. if it originated in a foreign country, it must be attested by Counselor of the Embassy in that country

4. Determine that the person claiming to be the Attorney is actually that person;

5. Original or a court certified true copy of PA must be retained for record.

6. Bank to ensure that the power of attorney is registered if legally it requires registration.

Mandate — A customer may for his own convenience like to authorize another person or persons to operate the account. Such an authority may be in the form of a ‘Mandate Letter’ or a ‘Power of Attorney’. A mandate contains an authority and a declaration that until the Bank receives a written notice to the contrary, a named person whose specimen signatures are provided on the mandate itself, is authorized to draw cheques notwithstanding that debiting of any such cheque may cause the account to be overdrawn. Without this clear authority in the mandate a bank should not allow payment of a cheque which creates a debit balance in the account.

A letter of mandate usually has specific clauses conferring upon the concerned person authority to draw, accept, indorse bills of exchange (endorsement = signature of a holder on a bill of exchange) and to receive statement of accounts. Most banks have printed mandate forms covering all the exigencies (exigency=an urgent need or demand that you must deal with SYN demand.) Whenever a mandate is received it must be thoroughly studied to see what powers have been vested in the person.

As soon as a notice of revocation of mandate is received the bank must take immediate measures to ensure that further no actions are allowed under the mandate.

Difference between a Power of Attorney and a Mandate:
1) A Mandate is usually in a form supplied by the bank and signed by the customer naming a certain person to act as his agent whereas a Power of Attorney is more formal document and is specifically typed;

2) A Mandate is restricted in form whereas a Power of Attorney may be general

3) A Mandate is addressed to the Bank only whereas a Power of Attorney is addressed to the world at large

4) Revocation of Mandate is easy; just inform the bank whereas revocation of a Power of Attorney is difficult;

5) A Mandatee cannot execute mortgages whereas an Attorney can;

6) A mandate becomes invalid with the death of the person executing the mandate whereas the position with regard to a Power of Attorney(irrevocable) is different.
{Note by Ashraf Ali “A power of attorney normally dies with the death of the person granting a power of Attorney. Power of attorney given to a bank for operation of account will die with the death of the account holder.
However if a person has given power of attorney to deal with landed property owned by a person after taking financial consideration from the person to whom the power of attorney is granted, the court may allow the operation of the power of attorney even after the death of the giver of the power of attorney due to the reason that the attorney giver had received the value of the property in respect of which the attorney was given}

Safe Custody of Customer’s Valuables and Safe Deposit Locker Facility
(This refers to Banker Customer relationship of Bailer and Bailee.)
One of much appreciated facilities offered by a banker to his customers is that of keeping in safe custody valuables of various kinds, including securities, Jewelry boxes, and documents of title property. Frequently such items are deposited in a locked box or sealed envelope, in which case the banker takes no cognizance
(Cognizance =to understand or consider sth; to take notice of sth)
of the contents. Sometimes, however, share certificates, insurance policies and title deeds are lodged without cover, as also negotiable securities, such as bearer bonds; particularly where the banker is required from time to time to detach and present the coupons for collecting periodical return.

Some banks issue a specific form of receipt for all articles lodged for safe custody, and require the receipt to be returned duly discharged by the customer before the articles can be withdrawn. Moreover, it is normally provided that the depositor shall attend in person to withdraw the articles. If he is unable to do so, he is required to sign an order on the back of the receipt instructing the banker to deliver the articles to the bearer of the document. Receipt given for locked boxes or sealed envelopes should specify “contents unknown.” When articles are deposited in the names of two or more persons, the receipts should be made out in the name of the all parties and the articles should be returned only against signatures of all the depositors, unless the customer has given a mandate that it can be returned to either or some of them.
On the death of the person in whose name the articles are left for safe custody, the banker should not permit dealings with the property except by the deceased’s personal representative after production and record of the succession certificate or, letters of administration, although he should not object to the examination of the articles in his presence by persons properly interested, e.g. the deceased’s personal representatives or near relatives or the family solicitor. A Will contained in a box may be handed over against the signature of all executors mentioned therein, but no other document should be given except after production of probate {probate = order by a court authorizing action on a Will} (or succession certificate or letters of administration) and on the authority of all the personal representatives. Where, for example, several executors are named in a will, the signature of one should not be accepted on behalf of all in acknowledgement of the delivery of articles lodged for safe custody in the name of the deceased.

10.11. Safe Deposit Locker Facility.
Apart from providing facility for accepting valuables for safe custody, safe deposit lockers are also made available to customers on rent. Bank holds the master key and a key for an individual locker is supplied to the customer. The locker can be opened only when both the keys are applied.

As regards articles lodged in a locker, the banker is not concerned with the lodgment and withdrawal of articles in the locker, even if the locker be operated under a double key system, one key being held by the banker (the bailee) and the other by the customer. The bank is only responsible for taking adequate measures to prevent tampering with the structure and safety mechanism of the locker and ensure that the locker is operated by the locker renter.

Customers have to declare that they will not deposit any arms, ammunition or other contrabands in the lockers. (What is a contraband-----check in a dictionary)

When a person deposits money in his account the bank is responsible to return the amount even if the amount is stolen or burnt. However the bank is not responsible for the loss if the articles placed in the lockers are destroyed by circumstances beyond the control of the bank like explosion or fire or otherwise stolen by robbers or thieves. Bank is only responsible to make best efforts to ensure a good security and proper maintenance of the lockers system. The bank encourages that customers should take out insurances with insurance companies for their valuable articles in the lockers .

In Pakistan due to the increase in incidents of lockers being looted by robbers, at the instructions of State Bank, the Commercial banks have arranged insurance of lockers against loss of fire, burglary etc, for amounts ranging from Rs 500,000 to Rs 15 lacs per locker the insurance amount depending upon size of locker. In case the customer is keeping goods worth more than the bank arranged insurance amount, he should make separate arrangement of insurance.

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“Whenever you find yourself on the side of the majority, it is time to pause and reflect.” -Mark Twain