Banker's lien
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A banker's lien is a legal right arise in many common law jurisdictions of a bank to exercise a lien over any property in the custody of the bank as security. Lien is of two types:
- Particular lien
- General lien
Particular lien confers to retain the goods in connection with which a particular debt arose i.e. A particular lien applies to one transaction or certain transaction only. e.g. a tailor has the right to certain the clothes made by him for his customer until his tailoring charges are paid by customer.
Scope
The precise effect of a banker's lien varies according to the laws of a particular jurisdiction. Under English common law it applies to all property coming into the possession of the bank in the usual course of banking business,[1] subject to the important exception that it does not apply to property which is deposited with the bank for safe custody.[2]
Whilst most common law liens normally only give the lienee a passive right to retain the property, unusually, the banker's lien permits the bank to sell the relevant property.[3]
The lien does not generally extend to intangible rights, including credit balances on accounts. However those credit balances may be subject to the banker's right to combine accounts.[4]
The banker's lien may be modified or abrogated by agreement.[5]
References
- ^ Brandao v Barnett (1846) 12 Cl 7 F 787
- ^ Leese v Martin (1873) LR 17 Eq 224 at 235. The bank holds such property as bailee, and may be entitled to exercise a separate lien as such.
- ^ Rosenberg v International Banking Corporation (1923) 14 Ll LR 344 at 347
- ^ National Westminster Bank Ltd v Halesowen Presswork & Assemblies Ltd [1972] AC 785
- ^ E.P. Ellinger; E. Lomnicka; C. Hare (2011). Ellinger's Modern Banking Law (5th ed.). Oxford University Press. p. 864. ISBN 978-019-923209-3.