A bank means any company licensed by the central Bank or Bank of Uganda {BOU} to carry on

the financial institution business as its principle business and includes all branches and offices
of that company in Ugandai. Banks and banking throughout history are defined by
contemporary sources as an organization that provides facilities for the acceptance of deposits
and provision of loansii. A banker is any person incorporated and licensed to carry on the
business of banking in Uganda. Lord Denning M.R said, emphasizing Pagets Law of Banking that
no one and no body corporate or otherwise can be a banker who does not take current
accounts, pay cheques drawn on himself, and collect cheques for his customers. The banking
community should identify a banker when they see oneiii. All definitions should confirm with
the understanding as it is in the Act and in case of any conflict, the Act shall prevailiv. A
customer of a bank is one who has an account with the bank and duration is not of essence
here as per House of Lords decisionv. According to Barclays Bank Ltd v Okenarhe and the
common banking usage, a person who has completed the bank’s formalities for opening an
account is regarded as a customer and a bank can itself be a customer of another bank as seen
in Importers company limited v Westminister Bank ltd with Lord Atkin. But this was expanded
In Woods v Martins Bank {1959} woods where the plaintiff sued the bank for ill financial advice
resulting in a financial loss and court held the bank liable though Woods did not hold any
account with the bank. The first prototype of banks were the merchants of the world who
made grain loans to farmers and traders who carried goods between cities around 2000 BC in
Assyria and Sumeria later into ancient Greece, the Roman empire and ancient India and China
also shows evidence of money lending activity as per Keith, Supra. Many histories position the
crucial historical development of the banking system to medieval and Renaissance Italy and
particularly the affluent cities of Florence, Venice and Genoa. The Bardi and Peruzzi families
dominated banking in the 14th century Florence establishing branches in many other parts of
Europe like Medici bank established by Giovanni Medici in 1397 and the oldest bank in
existence is Banca Monte dei paschi di siena situated in Siena, Italy that has operated since
1472. The major events in banking history include the Knights Templer in 1100, the Medici Bank
of Florence established in 1397, the Great Debasement during Henry V111 and Edward V1, the
joint stock company , the company of merchant adventures to new lands chartered in London
in 1553, the Amsterdam Stock Exchange in 1602, the bank of England in 1694, the Federal
Reserve Act created the Federal Reserve System in 1903 and the wall street crash of 1929 that
wiped out a third of the money supply in the United States of America among others. Before
Uganda got independence, government owned institutions dominated most banking in Uganda.
On 15th August, 1966 Bank of Uganda was established by an Act of Parliamentvi. And it’s on that
day that the Ugandan currency came into circulation. Prior to which the East African Currency
Board had been carrying out the activities of central banking. Banks in Uganda are classified as
Tier 1, Tier 11 Tier 111 and Tier 1Vvii. But all these are governed by the same principles for their
customer banker relationship.
 The relationship is that of debtor and creditor and money lent to the banker is not payable
except on demand by the customer made in writing, during normal working hours and at the
branch as banks do not have the duty to seek out and pay the debtors who have deposits.
When the customer opens an account with the bank and deposits money the banker is the
debtor and the customer the creditor because the banker owes money to the customer and the
customer has the right to demand back his money whenever he wants it from the banker. In
case of loans the banker is the creditor and the customer is the debtor because the customer
owes money to the bankerviii. Such a relationship traditionally is contractual in nature with
definite terms and conditions signed at account opening.

As per Tournier, it is an implied contract that the bank enters into a qualified obligation not to
disclose information concerning the customer’s affairs without his consent except on
compulsion by law, public interest interests of the bank and customer authorityix. The duty of
nondisclosure is a legal one arising out of the contract. Such a duty is only disqualified when
one is under compulsion by lawx, where there is a duty to the public to disclose, where the
interests of the bank require disclosure and where the disclosure is made by the express or
implied consent of the customer. Such information goes beyond the state of the account to all
transactions that go through the account to the securities given and extends beyond the time
the account is closed. The bank has to honor customers cheques to the credit balance on the
account or to the agreed overdraft limit approved, to maintain strict secrecy about customers
affairs subject to restrictions, to follow its usual course of business and to be consistent , to give
reasonable notice to the customer when closing an account in credit in the case of Property
Ltdxi, where the plaintiff was criticized in the public as fraudulent and the bank sought to close
their account, so as to minimize negative publicity and the bank was held to be in bleach of its
duty because one month’s notice was insufficient given the complex arrangements made with it
for the receipt of applications. The bank has to provide statements of account within a
reasonable period of time and account balances, to keep accurate records as seen in United
Overseas Bank v Jiwani where Jiwani was erroneously credited with 11,000 dollars by telex, he
spent the proceeds of the credit on hotel and it was held that the bank had misrepresented to
the customer. Other duties include receiving customers’ money and cheques, to advice the
customer immediately any forgery is brought to the banks attentionxiiand to exercise proper
care and diligence especially with regard to the payment and collection of cheques under the
Bills of Exchange Act 1882 and the Chqs Act 1957.

The customers duty to the bank include, - to take reasonable care when writing chqs as seen in
London Joint Bank v Macmillan and Arthur, where the firm sued the bank for cashg out a chq of
2 pounds altered to read 120 pounds but court declined for the dfirm had not exercised
sufficient care and skill when drawing and sidgning the chq , the duty to notify the bank of any
forgeries as per Greenwood v Martins where the customer spent 8 months without notifying
the bank of the forgeries and court held that he was in bleach of the duty, to exercise Care
when using chq or cash card , to demand payment of credit balance, to repay an overdraft on
demand as per Williams and Glyns Bank v Brown and to pay reasonable interest and
commission and to reimburse bank for any costs or losses from the operating of the account as
per the Supply of Goods and Services Act and under the Money Laundering Regulations,
corporate treasurers of nonfinancial companies have a duty to identify all counterparties with
whom they may be doing business

i
The Financial institutions Act, 2004 ,S3
ii
Retail Banking, Keith Pond , 2nd edition
iii
Uganda Dominions Trust V Kirkwood {1966} 2 QB 431
iv
The Financial Institutions Act, 2004 , S 133
v
Commissioners of Taxation V English , Scottish and Australian Bank, 1920 AC 683
vi
The Bank of Uganda Act
vii
The Financial Institutions Act, 2nd Schedule
viii
Joachimson v Swiss Bank Corporation {1921}3 KB 10
ix
Tournier v National Provincial and Union Bank of England {1924}1 KB 461
x
Williams and others V Summerfield {1972}2 QB 513
xi
Property limited v Lloys Bank { 1923}
xii
Brown v Westminster Bank