Narni Pty Ltd

Narni Pty Ltd v National Australia Bank Limited

Narni Pty Ltd v National Australia Bank Limited

Introduction

Relationships that bind a banker and his client are the contractual in nature. Indeed the opening of an account involves an agreement between two parties on the principles of consensus. To understand the evolution of the relationship "Bank - Client", it should be a reminder of the banking legislation.

This paper focuses on the banker-customer relationship in the case of Narni Pty Ltd v National Australia Bank Limited. Furthermore, this will focus on the reason to sue the National Australia Bank Limited.

Discussion

Narni was the owner of private nursing home in Carrum. Narni assets by the end of 1988 were finance through loan and business was facing serious complicatedness. The main problem in this private nursing home was the cash flow problem. The difficulty in cash flow led the company to experience more cash flow problems.

Answer 1)

In the beginning of 1988, Narni has asked NAB for the overdraft facility with the limit of $65,000 with formal approval which was not given until November. The NAB has honoured every cheque drawn by Narni showing their account as debit even though they had no funds in their account to meet the requirements. To give overdraft facility to Narni has always been refused by the NAB to extent to $100,000. As a matter of fact, bank As a matter of fact, the Bank frequently attempt to get Narni to maintain within the settled limit nevertheless simultaneously supported the account by constantly to honour any cheques drawn. NAB started dishonouring Narni's cheques, during June 198. This was due to the limit that was availed by the Narni. When the staff salary and wages cheques bounced the Narni nursing staff went on strike. The possession by the debenture holder on the Narni and the business was sold due to insolvency.

The reason Narni sued NAB was due to the damages and claimed that NAB bounced staff salary and wages cheques which caused failure of the business. Moreover, they also claimed that NAB omits their support under the agreement of overdraft without giving any notice to them. Narni also declared that NAB' constant support for Narni's account entailed that this support will continued as a foregone conclusion.

Overdrafts flow of funds from the account debit card in excess of the available account balance, i.e. lending to the customer's account, which allowed the bank to deposit to the personal bank account of an individual for a short period of time. Ability to obtain an overdraft loan is made by the loan agreement, which has some validity; it is usually 1 or 2 years. Features of an overdraft, loan repayment is required at least once a month, repeated during the renewal of the crediting period, accrual of interest only to the actual debt on the loan. Not everyone understood the banking terminology, and especially the overdraft loan or bank overdraft facility on the ...