Category Archives: Contract Law

A bank’s duty to question payment instructions, aka the Quincecare duty

Banking and Finance, Contract Law

Payment scams are rife. A particularly prevalent form is the authorized push payment (APP) scam. These payments are authorized by a bank customer after falling for a third party’s deceit, which may take many different forms, including fake investment opportunities, impersonation of figures such as bank officers and the police, and diverting an intended payment into the scammer’s account. Because these payments are authorized by the customer, the bank has a valid authority (mandate) to pay and must ordinarily make the payment. Authorized payment scams can be contrasted with unauthorized payments which do not originate from the customer and therefore involve forgery. In such cases, a bank has no authority to pay and at common law will bear the loss, although this is subject to contract terms allocating the loss to the customer. Most authorized payment scams are push payments which means that the payment instruction is sent by the payer to their bank. Examples are payments by mobile phone or home computer. By contrast, pull payment instructions are given by the payer to the payee who initiates the payment process through their own bank. Examples are cheques or direct debits. Pull payments are less prone to authorized payment scams, hence the focus on push payments.

Pre-judgment Interest on Liquidated and Unliquidated Sums

Contract Law, Private Law

A creditor bringing an action will want interest too. Interest compensates for late payment. For the last 200 years, relief came from statutes. The common law did not recognize a right to pre-judgment interest. That position was relaxed in Sempra Metals v IRC [2008] 1 AC 561. Interest on debts and other claims for breach of contract were legitimised. Plaintiffs can now present claims for compound interest at common law, whereas statutory interest is always simple. Where the interval between cause of action and judgment is long and the sum is large, this is a superior option. In a recent Privy Council decision (Sagicor Bank Jamaica v YP Seaton[2022] UKPC 48), interest calculated on a compound basis was roughly 52 times greater than simple, and roughly 368 times the principal sum.

Schrödinger’s Lawful Act Duress: Dead or Alive?

Contract Law

Can you set aside a contract if you were induced to enter it by my application of lawful pressure that may threaten your economic interests, reputation, or your concern to protect a loved one? This raises difficult policies since the only viable basis for discriminating between acceptable and unacceptable pressures is not positive law but social morality. On the other hand, if lawful pressures are always exempt, those who devise outrageous but technically lawful means of compulsion must always escape. The courts have accepted that the categories of duress are not closed and that an illegitimate threat can include one which is lawful, although it must ‘at least be immoral or unconscionable’. What then falls within this category of lawful act duress?