Law Essay Example | Topics and Well Written Essays - 1000 words - 1

Law - Essay Example However it was soon realized that the current definition was not adequate and hence required to be redefined to include a broader perspective. Accordingly various additional set of activities were included to broaden the scope of the term. According to section 11 of the Banking Act, certain activities included in the definition applied only to individuals and / or corporations, and any non-corporation which is not defined under this section, is forbidden to carry out â€Å"any banking business†. Similarly under section 8, non-ADI corporations are forbidden from carrying out â€Å"any banking business† (Comlaw, 2011). There is an ambiguity over the term â€Å"any banking business†. The sections 7 and 8 of the banking act prohibit the execution of 'any banking business' although there is no clear consensus regarding the term. There are serious doubts regarding what can possibly be considered as "any banking business". According to the section 5, banking business in cludes acceptance of funds from the public AND making loans to them, but whether a business which is involved in only accepting deposits but not make any loans, is considered as 'banking business' and vice versa, is questionable (Weaver et al, 2003). In Commissioners of the State Savings Bank of Victoria v Permewan, Wright & Co. Ltd, Issacs J, stated that the "essential characteristics of the business of banking may be described as the collection of money by receiving deposits upon loan, repayable when and as expressly or impliedly agreed upon, and the utilization of the money so collected by lending it again, in such sums as are required (Guest, Chalmers, 2005, 11). In United Dominions Trust Ltd v Kirkwood [1966] 2 QB 431 at 445ff, Lord Denning stated that, the times have changed drastically, ever since the definition of banking put forward by Issac, and newer instruments of payment are now added and used as acceptable modes of payment. This includes the use of cheques - crossed as well as uncrossed, and hence the same must also be included within the definition of banking (Gillies, 2004, 780). The Privy Council, in Bank of Chettinad Ltd v Colombo v Income Tax Commissioners, Colombo [1948] A.C. 378, accepted the following definition of banking: "a company which carries on as its principal business, the accepting of deposits of money on current account or otherwise, subject to withdrawal by cheque, draft or order (Brindle, Cox and Coleman, 2004, 426). The definition of 'business of banking' discussed so far, are inadequate on two grounds: firstly, there is significant ambiguity over the term "any business" used in the definitions and secondly, not all modes of payments are appropriately covered under the definitions. Thus on account of these two reasons, defining what comprises of 'the business of banking' becomes a daunting task. 2. The two key duties imposed on customers in accordance with MacMillan and Greenwood rule under the Australian law include (Hockin g, Smith, 1999, 156): (i) The duty to exercise adequate care while drawing cheques so as to prevent misleading the bank or to encourage forgery – (the MacMillan duty) and (ii) The duty to inform the bank if any cheques allegedly signed by the customers are forged (the Greenwood duty) The first duty was laid down in the London Joint Stock Bank Ltd. v Macmillan case while the second was laid down in the Greenwood v Martins Bank Ltd., case (Kelly & Holmes, 1997,