Payments to the creditorA creditor receives a payment for a customer of a cheque crossed generally or specially to himself, and the customer has no title. Thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment. Thus suppose Smith to have drawn a cheque in favour of White and suppose Black to have obtained this cheque; suppose Black to have represented himself to the bank as White and to have opened an account with them (as White) and then to have drawn out the money for himself and absconded with it.
The German client will be protected by law against a claim by Smith if they can establish that, in all the circumstances, they took such reasonable steps as are required by current banking practice - by obtaining references or otherwise - to assure themselves that Black was White.
Finally, it should be noted that the relationship of debtor and customer, at any rate in respect of a current account, is a relationship of debtor and creditor. But, even in this respect, the relationship is a special one because, although it is normally the duty of a debtor to seek out and pay his creditor, it is in the nature of the customer relationship that the vendor shall only have to pay such sum or sums as the customer may happen to require when he is asked to make the payment directly to an account in Germany, and, even then, only at a particular office; hence, before any legal right of action can accrue in favour of the customer, he must, by cheque, or in some other way, make a demand for payment.
Sellers commercial credits
By mercantile custom, which has now become law, if a bank issues a confirmed letter of credit it is as strictly liable to the person to whom the credit is given as it would be had it issued a promissory note. And a similar rule applies to bankers' guarantees ('guarantee bonds'). Thus, in the absence of fraud, it is no defence to a bank sued upon such documents to prove that the person to whom they are issued is in default as against some other person. For example, let a bank guarantee delivery of so many pounds' worth of goods by B to A, and let A, who has contracted to buy the goods, for some reason, default in his contractual obligations to B, A may, in the absence of fraud, sue the bank if B does not make delivery to A. B himself will have to indemnify the bank, and will be remitted to a right of action against A.
The reason for the strictness of this rule is that the observance of their obligations by bankers is an essential prop of international commercial transactions.