Malaysian Banking Law: Nature of the Banker–Customer Relationship — Contractual Relationship


Introduction
The relationship between a banker and a customer is fundamentally contractual in nature. This means that the rights, duties, obligations, and liabilities between a bank and its customer arise primarily from the law of contract.
Almost every banking transaction is based on contractual principles. Whether the bank:

• opens an account;
• grants financing;
• transfers funds;
• issues banker’s drafts;
• provides letters of credit; or
• performs remittance services,

the legal relationship between the parties is governed by contractual obligations.
Thus:
The banker–customer relationship is essentially a legal contract between the bank and the customer.


Nature of the Contractual Relationship
The contractual relationship between a bank and customer may contain:

• express terms; and
• implied terms.

Express Terms
Express terms are terms that are:

• specifically agreed upon;
• written down; or
• clearly communicated between the parties.

Examples include:

• financing agreements;
• account opening forms;
• terms and conditions of banking facilities;
• restructuring agreements.

Implied Terms
Implied terms are obligations that exist even though they are not expressly written.
These terms arise:

• by law;
• banking custom;
• judicial decisions;
• commercial practice.

Examples include:

• the bank’s duty to honour valid cheques;
• the customer’s duty not to facilitate forgery;
• the bank’s duty to exercise reasonable care.

In practice, banking relationships are usually governed by BOTH express and implied terms.


The Leading Case: Joachimson v Swiss Bank Corporation
The most important judicial explanation of the banker–customer relationship was given by Atkin LJ in Joachimson v Swiss Bank Corporation.
This case remains one of the leading authorities in banking law.


Facts of the Case
The case concerned the legal nature of money deposited into a bank account and the obligations owed between the bank and the customer.
The court had to determine:

• whether deposited money remained the customer’s property;
• the nature of the bank’s repayment obligation;
• when repayment becomes due.

Atkin LJ’s Explanation of the Relationship
Atkin LJ explained that when a customer deposits money into a bank:
❌ the bank does NOT hold the money on trust for the customer.
Instead:
✔ the bank becomes the borrower of the money.
The customer becomes:
✔ a creditor of the bank.
Thus:
Money deposited into a bank account legally becomes the bank’s money, while the customer obtains a contractual right to repayment.


Main Principles Established in Joachimson


1. Bank Receives and Collects Money for Customer
The bank undertakes:

• to receive deposits;
• to collect cheques and bills;
• to credit proceeds into the customer’s account.

2. Deposited Money Is Not Held on Trust
Once deposited:
✔ ownership of the money passes to the bank.
The bank may:

• use;
• lend; or
• invest

the money as part of its banking business.
The customer merely acquires:
✔ a contractual right to repayment.


3. Bank Becomes Debtor; Customer Becomes Creditor
The relationship is therefore:
debtor–creditor relationship
The bank owes a debt to the customer equal to the account balance.


4. Repayment Must Be Demanded
The bank is not automatically required to repay money unless:

• the customer makes a demand;
• during banking hours;
• at the branch where the account is maintained.

Thus:
✔ demand is necessary before the bank’s repayment obligation becomes enforceable.


5. Bank Must Honour Valid Written Orders
The bank undertakes to honour:

• cheques;
• payment instructions;
• written orders

provided:
✔ sufficient funds are available.


6. Bank Must Give Reasonable Notice Before Closing Relationship
Atkin LJ also explained that:
✔ a bank should not abruptly terminate the banking relationship without reasonable notice.
This is because outstanding cheques or payment instructions may still exist.


7. Customer Also Owes Duties
The customer owes obligations to the bank as well.
The customer must:

• exercise reasonable care when signing cheques;
• avoid facilitating forgery or fraud;
• comply with banking procedures.

Single and Indivisible Banking Relationship
Although banks and customers may enter into separate transactions such as:

• loans;
• securities sales;
• guarantees;
• remittances,

the overall banker–customer relationship is generally treated as:
one continuous and indivisible contractual relationship.
The banking contract continues:

• until terminated by agreement;
• closure of account;
• insolvency;
• death; or
• other legal means.

How the Contract Is Formed
Like ordinary contracts, banker–customer relationships arise through:

• offer; and
• acceptance.

Usually:

• the customer applies to open an account (offer);
• the bank accepts the application (acceptance).

Once accepted:
✔ the contractual relationship begins.
This principle links with earlier cases discussed regarding:

• when customer status arises;
• immediate creation of banker–customer relationships.

Connection with Earlier Cases


Link with Commissioners of Taxation v English Scottish and Australian Bank Ltd
This case established:
✔ customer relationship may arise immediately once the bank accepts funds.
Joachimson explains:
✔ the legal contractual consequences once that relationship exists.


Link with Woods v Martins Bank Ltd
Woods recognised that:
✔ banking relationships may arise through negotiations and contractual dealings even before formal account opening.
Joachimson supports this by emphasising:
✔ banking relationships are fundamentally contractual.


Link with Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd
Bekalan Sains demonstrates:
✔ once contractual banking obligations exist, BOTH bank and customer must comply with their obligations.
A customer who breaches contractual obligations cannot insist upon continued financing facilities.


Application (Simple Example)
Suppose:

• Ali opens a current account with a bank;
• deposits RM10,000;
• later issues a cheque for RM5,000.

Legally:
✔ the RM10,000 becomes the bank’s money;
✔ the bank owes Ali a debt of RM10,000;
✔ Ali has the contractual right to demand repayment;
✔ the bank must honour Ali’s cheque if sufficient funds exist.
However:
✔ Ali must sign cheques carefully and avoid negligence that may facilitate fraud.


Critical Analysis (Simple Understanding)
The contractual theory of banking is extremely important because it explains:

• why banks can use deposited money for lending;
• why customers are treated as creditors rather than owners of deposited funds;
• why banks owe repayment obligations;
• why banking duties arise from contractual arrangements.

The relationship is therefore not merely social or administrative — it is a legally enforceable commercial contract.
Modern banking services such as:

• online banking;
• electronic transfers;
• digital payments;
• financing facilities

all continue to operate based on these fundamental contractual principles.


Solution to the Case Scenario
Applying the principles from Joachimson v Swiss Bank Corporation:

• Customer deposited money ✔
• Bank accepted the account ✔
• Contractual relationship formed ✔
• Bank became debtor ✔
• Customer became creditor ✔

Therefore:
✔ both parties became legally bound by contractual duties and obligations.


Final Exam Rule (Very Important)
The banker–customer relationship is fundamentally contractual in nature. Once a bank accepts deposits or opens an account, the bank becomes debtor to the customer, while the customer becomes creditor of the bank, and both parties become bound by express and implied contractual obligations.

​

Malaysian Banking Law: Express Terms in the Banker–Customer Relationship
Comprehensive Study of Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail


Case Scenario
Rahman obtained a housing loan from a bank in Malaysia and charged his land to the bank as security. The loan agreement stated that:

• if Rahman defaulted in repayment; or
• resigned from his employment with the bank,

the entire loan would become payable “on demand.”
A few months later, Rahman resigned from his employment and stopped making installment payments. However, the bank did not immediately sue him. Instead, the bank later issued a formal letter demanding repayment.
Several years afterward, the bank applied for an order to sell Rahman’s charged land.
Rahman argued that:

• the bank’s action was already time-barred under the law of limitation because too much time had passed since the default.

The bank argued:

• the limitation period only started when the formal demand letter was issued because the contract expressly required a demand before legal action could be taken.

The issue before the court was:
👉 When did the cause of action actually arise?


Introduction
The banker–customer relationship is contractual in nature. Therefore, where parties expressly agree upon contractual terms, those terms will generally govern their relationship.
One important principle in banking law is:
Express contractual terms agreed between banker and customer will usually prevail because they reflect the intention of the parties.
This principle was clearly illustrated in Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail.


Facts of the Case
The defendant obtained a housing loan from Bank Pertanian Malaysia and charged his land as security.
The Charge Annexure contained several important express terms:

• failure to pay installments constituted default;
• resignation from employment with the bank also constituted default;
• repayment of the outstanding loan would become payable “on demand.”

The defendant resigned from the bank’s employment on 31 July 1983.
The bank later issued a formal letter of demand.
However, the statutory notice of default (Form 16D) was only issued almost eight years later.
The defendant argued:

• the bank’s claim was statute-barred because limitation time started running immediately after default.

The bank argued:

• limitation only began after the formal demand was issued because the agreement expressly required demand before legal proceedings could commence.

Issues Before the Court
The court had to determine:

1. Whether the “on demand” clause required a formal demand before legal action could arise;
2. When the cause of action actually accrued;
3. Whether the bank’s claim was barred by limitation law.

Decision of the Court
The High Court ruled in favour of the bank.
The court held:
✔ where the contract expressly states that repayment becomes payable “on demand,” a formal demand is an absolute requirement before the bank may sue.
Therefore:
✔ time only began running after the demand was made and repayment was refused.
The bank’s claim was therefore NOT time-barred.


Paraphrased Explanation (Q&A Format)


Q1: What was the main issue in this case?
The main issue was:
👉 When does limitation time start running where a banking agreement says repayment is payable “on demand”?
The defendant argued:

• time started immediately upon default.

The bank argued:

• time only started after a formal demand was issued.

Q2: What does “on demand” mean in banking contracts?
The court held:
“On demand” means exactly what it says.
If the agreement expressly requires a demand:
✔ the bank must first issue a formal demand before legal action may begin.
Thus:

• default alone is insufficient;
• demand is a contractual condition precedent.

Q3: Why was the demand so important?
Because the parties themselves expressly agreed that:
✔ repayment only becomes enforceable upon demand.
The court emphasised:
Express contractual terms reflect the intention of the parties and must therefore be respected.


Q4: When did the cause of action arise?
The court held:
✔ the cause of action arose only after:

• the bank issued the demand; and
• repayment was refused.

Therefore:
✔ limitation time only started from the date of demand.


Q5: Why did the defendant lose?
The defendant lost because:

• the agreement expressly required demand;
• the bank complied with the contractual procedure;
• limitation had not expired.

Therefore:
✔ the bank was entitled to enforce the security and obtain an order for sale.


Important Legal Principles Established


1. Express Contractual Terms Prevail
Where banker and customer expressly agree on contractual terms:
✔ those terms govern the relationship.
The courts will usually enforce the parties’ intention.


2. “On Demand” Clauses Must Be Interpreted Literally
If the agreement says repayment is payable “on demand”:
✔ formal demand becomes legally necessary before action may be taken.


3. Demand May Be a Condition Precedent
A demand clause may operate as a condition precedent.
Meaning:
✔ the bank’s right to sue only arises AFTER demand is made.


4. Limitation Time Depends on Contractual Terms
The limitation period does not always begin immediately upon default.
Where the contract requires demand:
✔ limitation begins only after:

• demand is issued; and
• repayment is refused.

Connection with Earlier Banking Law Principles


Link with Joachimson v Swiss Bank Corporation
The court relied heavily on the contractual principles explained in Joachimson.
Atkin LJ emphasised:
✔ banker–customer relationships are governed by contractual intention.
Similarly, in this case:
✔ the court focused on the parties’ express agreement requiring demand.


Link with Banker–Customer Contractual Relationship
This case reinforces the principle that:
Banking relationships are fundamentally contractual.
Therefore:

• express terms;
• implied terms;
• banking agreements

all determine the parties’ legal rights and obligations.


Application to the Case Scenario
Applying the principles from Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail:

• The agreement expressly required demand ✔
• The bank issued a formal demand ✔
• Repayment was refused ✔
• Cause of action only arose afterward ✔

Therefore:
✔ limitation time only started after demand.
The bank’s claim remains valid and enforceable.


Critical Analysis (Simple Understanding)
This case highlights the importance of carefully drafted banking agreements. Courts will usually uphold express contractual terms because they reflect the commercial intention of the parties.
The decision also protects customers from sudden legal action because:
✔ banks cannot immediately sue where the contract requires prior demand.
At the same time, the decision protects banks by ensuring:
✔ limitation periods do not begin prematurely before the bank formally activates repayment obligations.
The case therefore balances:

• contractual certainty;
• fairness between bank and customer;
• commercial practicality.

Solution to the Case Scenario
The bank acted lawfully because:

• the agreement expressly required formal demand;
• the bank complied with that requirement;
• limitation only started after demand was issued.

Therefore:
✔ the bank was entitled to enforce the charge and obtain an order for sale.
Rahman’s argument that the claim was time-barred would fail.


Final Exam Rule (Very Important)
Where a banking agreement expressly provides that repayment is payable “on demand,” a formal demand becomes a condition precedent, and the bank’s cause of action only arises after such demand is made and repayment is refused.

​

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Direct and Circumstantial Evidence

Meaning of Direct Evidence
​Direct evidence refers to the statement of a person who testifies about facts personally perceived by him through his own senses. It is evidence that directly proves a fact in issue without requiring any inference. The actual production of a thing before the court for proof is also considered direct evidence.
The term “direct evidence” is used in two important senses.

Direct Evidence as Opposed to Hearsay Evidence
Direct evidence means evidence personally seen, heard, or perceived by a witness. The witness gives testimony based on his own observation and personal knowledge.
Hearsay evidence, on the other hand, is derivative evidence. It refers to statements made by a witness about what someone else told him regarding a fact. Under Section 55 of the BSA, direct evidence is preferred because it is based on personal perception, whereas hearsay evidence is generally inadmissible.
Thus, direct evidence stands in contrast to hearsay evidence because the witness himself has directly experienced the fact.

Direct Evidence as Opposed to Circumstantial Evidence
Direct evidence also differs from circumstantial evidence. Direct evidence directly establishes the fact in issue, whereas circumstantial evidence proves surrounding facts from which the court draws an inference regarding the main fact.
Circumstantial evidence does not directly prove guilt or liability. Instead, it establishes a chain of connected circumstances which collectively point toward the existence or non-existence of the principal fact.
Therefore, while direct evidence gives immediate proof, circumstantial evidence requires reasoning and inference.

Meaning of Circumstantial Evidence
Circumstantial evidence consists of facts and circumstances surrounding the event in issue. From these surrounding circumstances, the court infers the principal fact.
It seeks to establish the fact in issue indirectly through a series of connected facts. The strength of circumstantial evidence depends upon the completeness and consistency of the chain of circumstances.
Circumstantial evidence itself must also be proved through direct evidence given by persons who actually perceived those circumstances.

Kinds of Circumstantial Evidence
Circumstantial evidence is generally divided into two kinds:
1. Conclusive Circumstantial Evidence
Conclusive circumstantial evidence exists where the connection between the principal fact and the evidentiary fact is a necessary consequence of natural laws. In such cases, the inference becomes almost certain.

2. Presumptive Circumstantial Evidence
Presumptive circumstantial evidence exists where the inference drawn from the evidentiary facts is only probable and not absolutely certain. The court reaches its conclusion on the basis of probability and human conduct.

Illustration
Suppose A is charged with the murder of B.
If witness C states that he personally saw A stabbing B, this is direct evidence because the witness directly perceived the act of murder.
However, if C states that he saw A running away from the place where B’s dead body was found while carrying a blood-stained knife, this becomes circumstantial evidence. In this case, the court must infer from the surrounding circumstances that A committed the murder.
Thus, direct evidence proves the fact immediately, whereas circumstantial evidence proves it through inference from connected facts.

Conclusion
Direct evidence and circumstantial evidence are both important forms of proof under the Bharatiya Sakshya Adhiniyam. Direct evidence directly establishes the fact in issue through personal perception, while circumstantial evidence proves surrounding circumstances from which the court draws logical inferences. Although circumstantial evidence requires careful scrutiny, it can be sufficient for conviction if the chain of circumstances is complete and points only toward the guilt of the accused.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Real and Personal Evidence

Meaning of Real Evidence
​Evidence may be classified as either real evidence or personal evidence. Real evidence refers to any physical or material object produced before the court for inspection. It includes objects that are directly connected with the facts in issue and are examined by the court itself.
Real evidence generally consists of tangible things belonging to the class of material objects. For example, a weapon used in the commission of an offence, blood-stained clothes, fingerprints, or any object connected with the crime may be produced before the court as real evidence. Similarly, where contempt of court is committed in the direct presence of the court, it becomes direct real evidence of the fact.
The court may also conduct local inspection of places or objects, and such inspection forms part of real evidence because the judge personally observes the relevant facts.

Meaning of Personal Evidence
Personal evidence refers to evidence given through human agency. It mainly consists of statements made by witnesses before the court regarding facts perceived by them through their senses.
Such evidence is usually oral in nature and depends upon the testimony of individuals who possess knowledge about the facts in issue. Witnesses explain and prove the existence of relevant facts through their statements before the court.
Thus, while real evidence is derived from material objects, personal evidence is derived from human testimony.

Real Evidence under the Bharatiya Sakshya Adhiniyam
In the draft report of the Select Committee, real evidence was proposed to be included under a separate category called material evidence. However, this category was later omitted.
James Fitz James Stephen justified this omission by stating that introducing a separate category for real evidence would create unnecessary complications in the law of evidence.
As a result, real evidence does not expressly form part of the statutory definition of “evidence” under the BSA.

Reason for Exclusion from Definition of Evidence
The reason why real evidence is not separately included in the definition of evidence is that the court itself becomes the original perceiving witness of such facts. When a material object is produced before the court, the judge directly inspects and observes it.
Further, material objects are usually proved through oral testimony of persons connected with them. Therefore, real evidence indirectly falls within the scope of oral evidence because witnesses speak about the objects produced before the court.
The objects themselves are relevant facts, while the testimony explaining those objects constitutes oral evidence.

Illustration
If a knife alleged to have been used in a murder is produced before the court, the knife itself constitutes real evidence. The witness identifying the knife and explaining its connection with the crime provides personal evidence.
Similarly, if a court directly witnesses contempt committed in its presence, the observation of the judge itself becomes real evidence of the occurrence.

Conclusion
Real evidence and personal evidence are two important forms of proof under the Bharatiya Sakshya Adhiniyam. Real evidence consists of material objects physically produced before the court, whereas personal evidence is provided through human testimony. Although real evidence is not separately defined under the BSA, it remains highly significant because it allows the court to directly inspect objects connected with the facts in issue.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Meaning and Nature of Evidence

Meaning of Evidence
​The word “evidence” is derived from the Latin term Evidera, which means to discover clearly, ascertain, or prove the facts in question. James Fitz James Stephen defined evidence as “the application of the practical experience of courts to inquire into the truth.”
In legal terminology, evidence signifies the means through which relevant facts are brought before the court. The primary instruments used for this purpose are witnesses and documents. Under the Bharatiya Sakshya Adhiniyam, evidence is broadly divided into oral evidence and documentary evidence.

Oral Evidence
Oral evidence refers to statements made by witnesses before the court regarding matters under inquiry. Such statements may also be given electronically. Therefore, statements made through electronic means are also treated as oral evidence.
This provision is connected with Section 530 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, which permits examination of complainants and witnesses through electronic communication or audio-video electronic means.
Thus, oral evidence includes all statements made before the court, whether physically or electronically.

Documentary Evidence
Documentary evidence refers to documents produced before the court for inspection in support of a case. Under the BSA, electronic and digital records are also included within the definition of documents and are therefore treated as documentary evidence.
A document becomes evidence only when it is produced before the court for inspection. For example, a document voluntarily submitted by a party becomes documentary evidence. However, a handwriting sample obtained from an accused merely for comparison does not become evidence because it is not produced as a document for court inspection.

Deficiency in the Definition of Evidence
The statutory definition of evidence has often been criticized as incomplete because it includes only witness statements and documents. It does not expressly cover several important matters upon which judicial decisions may rest.
The definition excludes matters such as:

• Statements and admissions of parties
• Conduct and demeanor of witnesses
• Personal observations and knowledge of the judge
• Local inspections conducted by courts
• Facts of which courts take judicial notice
• Presumptions drawn by courts

For instance, a memorandum prepared by the court during local inspection forms part of the record and assists the judge in evaluating evidence, yet technically it does not fall within the narrow statutory definition of evidence.

Answer to the Criticism
The criticism is answered through the definition of the term “proved.” The BSA uses the broader expression “matters before it” instead of restricting itself to “evidence.” The term “matter” is wider and includes all materials that the court may properly consider.
In Alia Rai and Others v. Jhingur Tewari, the court observed that the legislature intentionally avoided using the word “evidence” in the definition of proved and instead used the broader term “matter before it.” This allowed courts to consider personal observations and other relevant materials while deciding cases.
Thus, although the statutory definition of evidence appears limited, it is supplemented by the wider concept of “matters before the court.”

Exhaustive Nature of the Definition
The Supreme Court has described the definition of evidence as exhaustive because every kind of evidence can ultimately be classified either as oral evidence or documentary evidence.
Although terms such as best evidence, hearsay evidence, primary evidence, secondary evidence, real evidence, and circumstantial evidence are not expressly mentioned in the definition, they can still be accommodated within oral or documentary evidence.
For example:

• An oral admission becomes oral evidence when testified to by a witness.
• A written admission becomes documentary evidence.
• A confession recorded and signed before the court becomes documentary evidence.
• Physical objects such as blood-stained clothes, weapons, and photographs may also be treated as documentary evidence because they permanently record facts connected with the case.

In Hardeep Singh v. State of Punjab, even a site chart prepared by a judge was treated as documentary evidence.

Conclusion
Evidence under the Bharatiya Sakshya Adhiniyam refers to the means through which relevant facts are brought before the court. It mainly consists of oral evidence and documentary evidence, including electronic and digital records. Although the statutory definition has been criticized for being incomplete, the broader expression “matters before the court” fills this gap. Ultimately, every form of evidence can be reduced to either oral or documentary evidence, making the definition practically comprehensive and exhaustive.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Document [Section 2(1)(d)]

Meaning of Document
​Section 2(1)(d) of the Bharatiya Sakshya Adhiniyam defines the term “document.” A document means any matter expressed, described, or otherwise recorded upon any substance by means of letters, figures, marks, or any other method, whether singly or combined, intended to be used for recording that matter. The definition also specifically includes electronic and digital records.
This definition is broad and covers every form of recorded information, whether in physical or electronic form. Therefore, anything capable of permanently recording information may qualify as a document under the BSA.

Inclusion of Electronic and Digital Records
One of the significant changes under the BSA is the express inclusion of electronic and digital records within the definition of a document. Information stored electronically through computers, smartphones, servers, websites, emails, or other digital devices is now clearly recognized as documentary evidence.
This amendment incorporates the interpretation given by the Supreme Court in Arjun Panditrao v. Kailash Kushanrao regarding Section 65B of the Indian Evidence Act, 1872. The purpose is to modernize the law of evidence and adapt it to technological developments.
For example, a video recording stored on a mobile phone qualifies as documentary evidence because it is information recorded upon a substance by electronic means.

Examples of Documents
The BSA recognizes several forms of documents. These include:

1. A writing is a document.
2. Words printed, lithographed, or photographed are documents.
3. A map or plan is a document.
4. An inscription on a metal plate or stone is a document.
5. A caricature is a document.
6. Electronic records such as emails, server logs, documents stored on computers, laptops, or smartphones, text messages, websites, location evidence, and voicemail messages stored on digital devices are also documents.

Thus, both traditional physical records and modern digital records are treated equally under the law.

Importance of the Expanded Definition
The expanded definition ensures that courts can effectively deal with modern methods of communication and storage of information. In contemporary times, many important transactions and communications occur digitally. Recognizing electronic and digital records as documents helps courts admit and evaluate technologically generated evidence.
This wider definition strengthens the legal framework by ensuring that documentary evidence remains relevant in the digital age.

Conclusion
Under Section 2(1)(d) of the Bharatiya Sakshya Adhiniyam, a document includes every form of recorded matter, whether physical or electronic. The inclusion of electronic and digital records marks a major advancement in Indian evidence law and reflects the growing importance of technology in legal proceedings. As a result, modern electronic records such as emails, mobile recordings, server logs, and digital messages are fully recognized as documentary evidence under the BSA.

Malaysian Banking Law — Debtor–Creditor Relationship Between Banker and Customer: Foley v Hill (1848) 2 HL Cas 28
Case Scenario
Question
Sarah deposits RM500,000 into her savings account at a commercial bank in Malaysia. Several months later, Sarah discovers that the bank has used depositors’ money to issue loans and generate profits through financing activities.
Sarah becomes unhappy and argues:

• the bank should not use her money without her permission;
• the bank is merely a trustee or agent holding the money for her;
• the profits earned from using her money should partly belong to her.

Sarah further claims that:

• the bank owes fiduciary duties over the deposited funds;
• she has a right to trace exactly how her money was used.

Is Sarah correct in law?


Answer
No. Sarah is not correct.
Applying the principle established in:
Foley v Hill
the relationship between a bank and a customer in relation to deposits is:
one of debtor and creditor, not trustee and beneficiary.
Once money is deposited into the bank:
✔ ownership of the money passes to the bank;
✔ the bank may use the money for its own banking business;
✔ the customer merely obtains a contractual right to repayment.
The bank therefore:

• does not hold the money on trust;
• does not act as trustee;
• does not owe fiduciary obligations over ordinary deposits.

Sarah’s right is simply:
to demand repayment according to the banking contract.


Introduction
One of the most fundamental principles in banking law is that:
the relationship between banker and customer is primarily a debtor–creditor relationship.
This principle governs:

• deposit accounts;
• savings accounts;
• current accounts;
• financing arrangements;
• repayment obligations.

The relationship changes depending on the nature of the transaction.


Nature of the Relationship
1. Deposit Accounts
When a customer deposits money into a bank:

• the bank becomes the debtor;
• the customer becomes the creditor.

This means:
✔ the bank owes money to the customer.
The customer does not retain ownership over the exact physical money deposited.
Instead:
the customer obtains a contractual right to repayment.


2. Financing or Loan Transactions
When a bank lends money to a customer:

• the bank becomes the creditor;
• the customer becomes the debtor.

This means:
✔ the customer owes repayment obligations to the bank.


Leading Authority
The foundational authority for this principle is:
Foley v Hill
This case firmly established:
the banker–customer relationship is one of debtor and creditor.


Facts of the Case
The customer brought an action against the bank claiming:

• the bank was in a fiduciary position;
• the bank acted similarly to an agent or trustee;
• the customer was entitled to know how the bank used the deposited money;
• the customer should benefit from profits derived from using the money.

The customer further argued that:

• the bank held the money in trust;
• limitation rules should not apply because trusteeship existed.

Held by the House of Lords
The House of Lords rejected the customer’s arguments.
The court held:
✔ the relationship between banker and customer is that of debtor and creditor;
✔ the bank is not a trustee over deposited money;
✔ the bank is entitled to use deposited money for its own business purposes.


Judgment of the Judges
Lord Cottenham LC
Lord Cottenham explained that:
once money is paid into a bank, it becomes part of the bank’s general assets.
The bank is therefore free to:

• use the money;
• lend the money;
• invest the money.

The customer’s right is merely:
✔ a right to repayment of an equivalent amount.
His Lordship stated in substance that:
the banker is not a trustee holding specific money for the customer, but a debtor who must repay the amount deposited.


Lord Brougham
Lord Brougham delivered one of the most important judicial explanations of banking law.
His Lordship explained:
“Money paid into a banker’s becomes immediately a part of his general assets; and he is merely a debtor for the amount.”
Lord Brougham further emphasised that:

• the bank does not keep deposited money separately;
• the money loses its identity once deposited;
• the bank may use the money commercially.

He rejected the argument that the bank was a trustee and stated that:
the relationship is commercial and contractual, not fiduciary.


Legal Principle Established
The court established several major principles:
(1) Ownership of Deposited Money Passes to the Bank
Once money is deposited:
✔ the money becomes the bank’s property.
The bank may:

• lend the money;
• invest the money;
• use it for banking operations.

The customer no longer owns the exact deposited funds.


(2) Customer Has Only a Contractual Right
The customer’s right is:
✔ a contractual right to repayment.
The bank undertakes:

• to repay equivalent sums;
• according to the account terms;
• upon demand or maturity.

(3) No Trust Relationship Exists
The bank is NOT:

• a trustee;
• fiduciary holder of the funds;
• an agent holding money separately.

Therefore:
✔ fiduciary principles generally do not apply to ordinary deposits.


Why This Principle Is Important
This principle is essential for the banking system.
If banks had to:

• keep each customer’s money separately;
• avoid using deposits;
• account for profits made from deposits;

modern banking would become impossible.
Banks function by:
✔ pooling deposits;
✔ lending money;
✔ financing economic activity.


Connection with Modern Malaysian Banking Law
This debtor–creditor principle remains fully applicable in Malaysia today.
It underlies:

• savings accounts;
• current accounts;
• fixed deposits;
• financing facilities;
• Islamic banking structures (subject to Shariah modifications).

Malaysian courts consistently recognise:
ordinary banker–customer relationships are contractual, not fiduciary.


Relationship with Other Banking Cases
Connection with Joachimson v Swiss Bank Corporation
Joachimson v Swiss Bank Corporation
This case further clarified that:
✔ banks borrow deposited money;
✔ banks promise repayment according to contractual terms.
It reinforced the debtor–creditor nature of banking relationships.


Connection with Kian Lup Construction v Hong Kong Bank Malaysia Bhd
Kian Lup Construction v Hong Kong Bank Malaysia Bhd
The Malaysian High Court confirmed:

• deposit accounts create debtor–creditor relationships;
• fiduciary duties do not normally arise in ordinary banking transactions.

Critical Analysis
Why the Court Rejected Fiduciary Duties
The House of Lords recognised the practical realities of banking.
Banks do not simply store money like warehouses.
Instead:
✔ banks actively use deposits for lending and investment activities.
If fiduciary duties applied to all deposits:

• banks could not freely use deposited money;
• commercial banking would collapse;
• modern credit systems would become impossible.

The court therefore adopted a commercial approach consistent with banking practice.


Advantages of the Debtor–Creditor Principle
The principle provides:
✔ certainty in banking operations;
✔ flexibility for lending activities;
✔ efficient circulation of money;
✔ economic stability.
It allows banks to:

• finance businesses;
• grant loans;
• support economic growth.

Possible Criticisms
Some critics argue that:

• customers often believe banks are safeguarding their actual money;
• customers may not fully appreciate that ownership transfers to the bank.

However:
modern banking systems depend on this legal structure.
Without it:
✔ banks could not function effectively.


Practical Application in Modern Banking
This principle applies daily in:

• ATM withdrawals;
• savings accounts;
• online banking;
• current accounts;
• fixed deposits;
• loan financing.

When customers deposit money:
✔ the bank becomes legally indebted to them.
When banks lend money:
✔ customers become indebted to the bank.


Application to Fixed Deposits
For example:
when a customer places RM100,000 in a fixed deposit:

• the bank may use the money commercially;
• the bank promises repayment upon maturity;
• interest is paid according to contract.

The customer:
✔ does not retain ownership of the exact notes deposited.


Practical Case Scenario
Scenario
Aiman deposits RM200,000 into a fixed deposit account at a Malaysian bank.
Later, he discovers the bank used deposited funds to issue housing loans and corporate financing.
Aiman claims:

• the bank wrongfully used “his money”;
• the bank owes fiduciary obligations;
• the bank must share profits earned from the loans.

Legal Solution
Applying:
Foley v Hill
the bank would likely succeed because:

• ownership of deposited funds passed to the bank;
• the relationship is debtor–creditor;
• the bank may lawfully use deposits for banking activities;
• the customer only has a contractual right to repayment.

Therefore:
✔ Aiman cannot claim profits earned by the bank.


Difference Between Debtor–Creditor and Fiduciary Relationships
Debtor–Creditor Relationship

• contractual;
• commercial;
• repayment obligation exists;
• bank may use money freely.

Fiduciary Relationship

• trust and loyalty exist;
• money must be managed for beneficiary’s interests;
• fiduciary cannot freely use trust property for personal benefit.

Ordinary banking deposits generally fall into the first category only.


Importance in Banking Law
This principle forms the foundation of:

• commercial banking;
• loan creation;
• credit systems;
• financial intermediation.

Without the debtor–creditor framework:
✔ modern banking could not operate efficiently.


Questions for Further Research

1. Should modern digital banking create stronger fiduciary obligations toward customers?
2. Does Islamic banking modify the traditional debtor–creditor relationship?
3. Should banks owe enhanced duties where vulnerable customers are involved?
4. Can fintech platforms alter the traditional legal structure between banks and customers?
5. Should customers receive greater legal protection regarding the use of deposited funds?
6. To what extent should banks disclose how customer deposits are utilised?
7. Can fiduciary duties arise in wealth management and private banking services?
8. How does the Quincecare duty interact with the debtor–creditor relationship?

Final Legal Principle
In ordinary banking transactions, the relationship between banker and customer is primarily one of debtor and creditor. Once money is deposited, ownership passes to the bank, which may use the money for its own banking business. The customer retains only a contractual right to repayment and the bank does not ordinarily hold the money as trustee or fiduciary.

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​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Disproved [Section 2(1)(c)]

Meaning of Disproved
​Section 2(1)(c) of the Bharatiya Sakshya Adhiniyam defines the term “disproved.” A fact is said to be disproved when, after considering all the matters before it, the court either believes that the fact does not exist or considers its non-existence so probable that a prudent person would act on the assumption that it does not exist.
Thus, disproved is the opposite of proved. The court reaches a conclusion that the asserted fact is either false or highly improbable.

Basis of Disproving a Fact
The court may disprove a fact in two ways:
1. By Direct Evidence
A fact may be disproved through direct evidence showing that it does not exist.
For example, if an accused claims that he was present at a particular place during the commission of a crime, but CCTV footage clearly shows that he was elsewhere, the alleged fact may be disproved through direct evidence.

2. By Circumstantial Evidence
A fact may also be disproved indirectly through surrounding circumstances that make its existence highly improbable.
For instance, if a person claims ownership over stolen property but surrounding circumstances clearly indicate that the property belonged to someone else, the court may infer that the claim is false.

Standard Applied by the Court
The section applies the standard of a “prudent man.” The court does not require absolute certainty. It is enough if the non-existence of the fact appears so probable that a reasonable and prudent person would rely upon that assumption in ordinary life.
Therefore, disproving a fact depends upon probability, reason, and judicial evaluation of the materials placed before the court.

Difference between Disproved and Not Proved
A disproved fact is one that the court believes does not exist or is highly improbable. In contrast, a fact is “not proved” when the court is unable to conclude either way.
Thus:

• Proved → Court believes the fact exists.
• Disproved → Court believes the fact does not exist.
• Not proved → Court remains uncertain about the existence or non-existence of the fact.

Illustration
Suppose A is accused of committing theft at Delhi on a particular date. A claims that he was in Mumbai at the relevant time. If railway records, CCTV footage, and witness testimony conclusively show that A was actually present in Delhi, then A’s plea of alibi becomes disproved.
Similarly, if a person claims that a signature on a document is genuine, but expert examination proves that the signature was forged, the alleged fact stands disproved.

Conclusion
Under Section 2(1)(c) of the Bharatiya Sakshya Adhiniyam, a fact is said to be disproved when the court concludes that it does not exist or considers its non-existence highly probable. The determination is based on judicial assessment of all matters before the court and the standard of a prudent person. Disproving a fact may occur through direct evidence or through circumstantial evidence that makes the existence of the fact improbable.

Malaysian Banking Law: Contractual Nature of the Banker–Customer Relationship
Case Scenario
Aisyah deposits RM50,000 into a fixed deposit account with a bank. She later claims that the bank is holding her money on trust and owes her fiduciary duties. At the same time, her company obtains a business loan from the same bank. When the company defaults, the bank enforces its contractual rights. Aisyah argues that because the bank is her banker, it must act in her best interest in all dealings.
The issue is whether the banker–customer relationship is fiduciary or merely contractual.


General Principle
The banker–customer relationship is mainly contractual. This means the relationship is governed by the agreement between the bank and customer, including express and implied terms.
For deposit accounts, the basic contract is this: the customer deposits money with the bank, and the bank is entitled to use that money for its own purposes. In return, the bank undertakes to repay an equivalent amount to the customer, either on demand or at a fixed date, with or without interest depending on the type of account.
Therefore, when money is deposited into a bank, the bank does not usually hold the money as trustee. Instead, the bank becomes a debtor, and the customer becomes a creditor.


Standard Chartered Bank v Tiong Ngit Ting
In Standard Chartered Bank v Tiong Ngit Ting [1998] 5 MLJ 220, the plaintiff claimed RM10,000 based on a letter from 1955 which stated that the bank had credited her fixed deposit account. The bank denied liability and argued that the letter was not a proper fixed deposit receipt.
The High Court held that the letter was not a fixed deposit receipt because it lacked important fixed deposit terms, especially the rate of interest and the period of deposit. Without these essential terms, there could not be a proper fixed deposit contract.
The court explained that for a fixed deposit to exist, the parties must agree on the fixed period and interest rate. If these terms are not determined, the deposit cannot properly be treated as a fixed deposit.


Legal Principle from Standard Chartered Bank v Tiong Ngit Ting
The case shows that a fixed deposit contract requires clear agreed terms. A mere acknowledgment that money has been credited is not enough to prove a fixed deposit.
For a fixed deposit, the parties must agree on:

• the amount deposited;
• the duration of the deposit;
• the maturity date;
• the interest rate;
• repayment terms.

Without these terms, the document may only amount to evidence of payment, similar to a pay-in slip, rather than a binding fixed deposit receipt.


Debtor–Creditor Relationship
The essence of the banker–customer relationship is that the bank becomes debtor and the customer becomes creditor.
For example, if a customer deposits RM10,000 into a current account, the bank may use that money in its business. The customer does not retain ownership of the exact physical money deposited. Instead, the customer has a contractual right to demand repayment of an equivalent amount.
In a current account, repayment is usually available on demand. In a fixed deposit, repayment is usually due at maturity, with interest.


No General Fiduciary Duty
A normal banker–customer relationship is not fiduciary. This means the bank does not automatically owe a duty to act solely in the customer’s best interest.
In Kian Lup Construction v Hong Kong Bank Malaysia Bhd, the court explained three possible banking situations.
First, where the customer deposits money, the relationship is debtor and creditor. The bank is debtor and the customer is creditor.
Second, where the bank gives financial or advisory services, a fiduciary or special duty may arise if the customer relies on the bank’s advice.
Third, where the bank provides a loan or financing facility, the bank is creditor and the customer is debtor.
Only the second situation may involve fiduciary duties. Ordinary deposit and loan relationships remain contractual.


When a Fiduciary Duty May Arise
A fiduciary or special duty may arise where the bank gives advice and the customer relies on that advice.
Based on Hedley Byrne v Heller, a special relationship may exist where:

• the advice is given for a known purpose;
• the bank knows the customer will rely on it;
• the customer is likely to act without independent inquiry;
• the customer acts on it and suffers loss.

So, if a bank merely operates an account or grants a loan, no fiduciary duty arises. But if the bank acts as financial adviser and the customer relies on its advice, a higher duty may arise.


Aseambankers Malaysia Bhd v Shencourt Sdn Bhd
In Aseambankers Malaysia Bhd v Shencourt Sdn Bhd, the Court of Appeal confirmed that a banker–customer relationship is generally contractual and not fiduciary.
The court stated that the bank’s purpose is commercial. Its intention is to make profit. Therefore, ordinary negotiations between borrower and lender do not create fiduciary obligations.
This means a borrower cannot simply claim that the bank owed fiduciary duties merely because the bank gave financing or negotiated repayment terms.


CIMB Bank v Sebang Gemilang
In CIMB Bank Bhd v Sebang Gemilang Sdn Bhd, the bank closed a sinking fund account and credited fixed deposit monies to the customer’s account after completion of a project. The issue was whether the bank acted dishonestly.
The Federal Court held that the bank had merely acted according to the normal banker–customer relationship. There was no sufficient evidence of dishonesty. Mere knowledge of facts was not enough; dishonesty required consciousness that the conduct was contrary to ordinary standards of honest behaviour.
This case shows that courts are careful not to impose equitable or fiduciary liability on banks unless there is clear evidence of wrongdoing.


Duty of Care Still Exists
Although the ordinary relationship is not fiduciary, the bank still owes a duty of care to its customer.
A bank must exercise reasonable care and skill when:

• carrying out customer instructions;
• interpreting mandates;
• processing payments;
• disbursing loan funds;
• handling banking transactions.

However, the duty of care is not unlimited. It does not turn the bank into the customer’s adviser in every transaction.


Application to the Case Scenario
Aisyah’s claim that the bank holds her deposit on trust is unlikely to succeed. Once she deposits RM50,000 into the bank, the bank becomes debtor and she becomes creditor. The bank may use the money for its own purposes, but must repay an equivalent amount according to the account terms.
If the account is a fixed deposit, Aisyah must prove the agreed terms, such as interest rate and maturity period. Without those terms, it may be difficult to prove a proper fixed deposit contract.
Her company’s loan relationship is also contractual. The bank is creditor and the company is debtor. The bank does not owe fiduciary duties merely because it granted a loan. However, the bank must still exercise reasonable care in carrying out agreed banking functions.


Critical Analysis
The contractual approach is commercially practical because banks operate by receiving money and using it for lending and investment. If banks were treated as trustees of every deposit, modern banking would become impossible because banks could not freely use deposited funds.
At the same time, the law protects customers through contractual rights. Customers may demand repayment, enforce agreed terms, and sue for breach if the bank fails to perform its obligations.
The law also recognises that banks may owe higher duties in special situations, especially where they provide advice and the customer reasonably relies on it. Therefore, the law balances commercial freedom for banks with protection for customers.


Solution to the Case Scenario
The bank is not a trustee of Aisyah’s deposited money. The relationship is contractual, specifically debtor–creditor. Aisyah may demand repayment according to the account terms, but she cannot claim fiduciary protection merely because she is a customer.
For the company loan, the bank is creditor and the company is debtor. The bank may enforce repayment if the company defaults. Unless the bank gave specific financial advice and Aisyah or the company relied on it, no fiduciary duty arises.


Final Exam Rule
The banker–customer relationship is generally contractual, not fiduciary. In deposit accounts, the bank is debtor and the customer is creditor; in loan accounts, the bank is creditor and the customer is debtor. A fiduciary duty arises only in special advisory circumstances where reliance is established.

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Malaysian Banking Law — Trustee vs Agent vs Fiduciary Duties
Introduction
In banking law, students often confuse:

• trustee relationships;
• agency relationships;
• fiduciary duties.

Although these concepts are closely related, they are NOT identical.
A person may:

• be a fiduciary without being a trustee;
• be an agent without being a trustee;
• owe fiduciary duties without holding property on trust.

Understanding the differences is extremely important because:
✔ different legal duties arise under each relationship;
✔ different remedies apply;
✔ banks may owe one duty but not another.


1. Trustee Relationship
Meaning
A trustee is a person who:
holds and manages property or money for the benefit of another person (the beneficiary).
The trustee has legal ownership of the property but must use it:
✔ solely for the beneficiary’s benefit.


Main Characteristics of a Trustee
A trustee:

• holds trust property;
• must not misuse the property;
• must avoid conflicts of interest;
• must not make secret profits;
• owes strict fiduciary obligations.

The trustee must always:
✔ prioritise the beneficiary’s interests.


Nature of Ownership
In a trust:

• trustee = legal owner;
• beneficiary = beneficial owner.

Example:
A trustee managing inheritance money for a child.


Banking Example
Normally:
✔ banks are NOT trustees of customer deposits.
This was established in:
Foley v Hill
The court held:
deposited money becomes part of the bank’s assets.
Thus:
✔ the bank is debtor, not trustee.


Exception
A bank MAY become a trustee:

• if money is specifically segregated;
• if the bank knowingly handles trust money improperly;
• if constructive trust principles arise.

Example:
A solicitor’s client account held specifically on trust.


2. Agency Relationship
Meaning
An agent is a person:
authorised to act on behalf of another person (the principal).
The agent creates legal relations between:

• the principal;
• third parties.

Main Characteristics of an Agent
An agent:

• acts on instructions;
• represents another person;
• may enter contracts on behalf of the principal.

The agent owes duties such as:
✔ obedience;
✔ loyalty;
✔ reasonable care.


Examples of Agency
Examples include:

• lawyers acting for clients;
• real estate agents;
• company directors;
• stockbrokers.

Banking Example
A bank may act as agent when:

• transferring funds;
• collecting cheques;
• paying bills;
• disbursing money according to customer instructions.

Example:
A customer instructs the bank to transfer RM50,000.
The bank acts:
✔ as agent carrying out instructions.


Case Illustration
Joachimson v Swiss Bank Corporation
The case recognised that:
✔ banks undertake obligations to honour customer instructions.


Agency Does NOT Mean Trustee
An agent:

• does not necessarily own property;
• may simply carry out instructions.

Thus:
✔ an agent is not automatically a trustee.


3. Fiduciary Duty
Meaning
A fiduciary duty arises where:
one party places trust and confidence in another.
The fiduciary must:
✔ act loyally;
✔ act honestly;
✔ avoid conflicts of interest.


Main Characteristics of Fiduciary Duties
A fiduciary must:

• act in good faith;
• avoid secret profits;
• avoid conflicts;
• disclose important information honestly.

Fiduciary Relationship Involves
Usually:

• trust;
• confidence;
• reliance;
• vulnerability;
• advisory responsibility.

Banking Context
Ordinary banker–customer relationships are usually:
✔ contractual only;
✔ debtor–creditor only.
They are NOT automatically fiduciary.
This principle was recognised in:
Kian Lup Construction v Hong Kong Bank Malaysia Bhd
and
Aseambankers Malaysia Bhd v Shencourt Sdn Bhd


When Fiduciary Duties May Arise in Banking
Fiduciary duties may arise where:

• the bank gives investment advice;
• the customer heavily relies on the advice;
• the bank manages investments;
• the bank acts as financial adviser.

Leading Authority
Hedley Byrne v Heller
This case recognised that:
✔ special advisory relationships may create fiduciary-like obligations.


Important Banking Principle
Banks generally:
✔ owe duties of care;
✔ do NOT owe general fiduciary duties.
This was reinforced in:
Lee Cheong Chee v HSBC Bank Malaysia Bhd
The court held:
banks are not generally required to advise customers on investment risks unless special advisory relationships exist.


Comparison Between Trustee, Agent and Fiduciary
A. Main Role
Trustee
Holds and manages property for another.
Agent
Acts on behalf of another.
Fiduciary
Must act loyally in another’s interests.


B. Ownership of Property
Trustee
✔ holds legal ownership.
Agent
✘ usually does not own property.
Fiduciary
May or may not hold property.


C. Main Obligation
Trustee
Protect trust property for beneficiaries.
Agent
Follow instructions of principal.
Fiduciary
Act loyally and avoid conflicts.


D. Level of Duty
Trustee
Very strict.
Agent
Moderate.
Fiduciary
High duty of loyalty.


E. Banking Example
Trustee
Bank holding segregated trust account.
Agent
Bank transferring funds for customer.
Fiduciary
Bank acting as investment adviser.


Simple Illustration
Trustee Example
A father leaves RM1 million in trust for his child.
The trustee:
✔ manages the money solely for the child.
The trustee cannot:

• use the money personally;
• profit secretly.

Agent Example
Ali instructs his lawyer to buy land for him.
The lawyer:
✔ acts on Ali’s behalf.


Fiduciary Example
A financial adviser recommends investments while secretly earning commissions.
If the adviser hides this conflict:
✔ fiduciary duties may be breached.


Banking Case Scenario
Scenario 1 — Trustee
A bank holds money in a solicitor’s client account specifically separated from general bank assets.
The bank knowingly misuses the trust funds.
Result:
✔ the bank may become liable as trustee or constructive trustee.


Scenario 2 — Agent
A customer instructs the bank to transfer RM100,000 to a supplier.
The bank accidentally transfers the money to the wrong account.
Result:
✔ bank may breach agency duties and duty of care.


Scenario 3 — Fiduciary
A bank investment adviser persuades a retiree to buy risky investments without disclosing hidden commissions.
Result:
✔ fiduciary duties may arise because trust and reliance exist.


Practical Importance in Banking Law
Understanding these distinctions is important because:

• different legal remedies apply;
• liability differs significantly;
• duties owed by banks vary according to the relationship.

Modern Malaysian Position
Malaysian courts generally hold that:
Ordinary Banking Relationship
✔ contractual;
✔ debtor–creditor;
✔ no general fiduciary duty.


Special Banking Relationship
Fiduciary duties may arise where:

• investment advice is given;
• trust and reliance exist;
• the bank assumes advisory responsibilities.

Critical Analysis
Modern banking relationships are increasingly complex because banks now provide:

• investment services;
• wealth management;
• financial planning;
• digital financial products.

This creates tension between:
✔ traditional debtor–creditor principles;
and
✔ modern expectations of customer protection.
Courts therefore try to balance:

• commercial practicality;
• customer protection;
• banking efficiency.

Final Examination Rule
A trustee holds and manages property for another and owes strict fiduciary duties. An agent acts on behalf of another person and must follow instructions with reasonable care. A fiduciary is someone who must act loyally and avoid conflicts of interest because trust and confidence have been placed in him. In banking law, ordinary banker–customer relationships are generally debtor–creditor and contractual, not fiduciary, unless special advisory or trust relationships arise.

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