When anyone opens a current account at a bank, he is lending the bank money,
repayment of which he may demand at any time, either in cash or by drawing
a cheque in favour of another person. Primarily, the banker-customer
relationship is that of debtor and creditor—who is which depending on
whether the customer’s account is in credit or is overdrawn. But, in
addition to that basically simple concept, the bank and its customer
owe a large number of obligations to one another. Many of these
obligations can give rise to problems and complications but a bank
customer, unlike, say, a buyer of goods, cannot complain that the
law is loaded against him.
The bank must obey its customer’s instructions, and not those of
anyone else. When, for example, a customer first opens an account,
he instructs the bank to debit his account only in respect of
cheques drawn by himself. He gives the bank specimens of his
signature, and there is a very firm rule that the bank has no
right or authority to pay out a customer’s money on a cheque
on which its customer’s signature has been forged. It makes
no difference that the forgery may have been a very skillful
one: the bank must recognize its customer’s signature.
For this reason there is no risk to the customer in the
practice, adopted by banks, of printing the customer’s
name on his cheques. If this facilitates forgery, it is
the bank which will lose, not the customer.