Banky’s Understanding: Mandate: Authority given by account holder for a third person to do certain acts on their behalf. Unstamped agreement (exam PYQ! — not stamped, not MoU, not letter of authority). Person giving = mandator, receiving = mandatory. Can be revoked anytime. Terminates on: death, insanity, insolvency of mandator, or completion of the work. Different from POA in that mandate is simpler, unstamped, and more limited.

Banky’s Understanding: POA: Formal, stamped document authorising another to act. Person giving POA = donor. Person receiving = donee (exam PYQ!). Can be general (broad powers) or specific (limited acts). Must be registered. Fiduciaries (executors, administrators, guardians) CANNOT appoint agents. Attorney CANNOT delegate unless POA specifically provides for substitution. For companies: delegation only if authorised person has specific authority to further delegate.

Banky’s Understanding: Banker’s Lien: Right to retain possession of customer’s goods/securities until debt is paid. Sec 171 of Indian Contract Act, 1872. Banker’s lien = implied pledge (exam PYQ!) — more than general lien because bank can SELL the goods on default. No separate agreement needed. Applies to goods received in ordinary course of banking business. Two types: General lien (retain for general balance) and Particular lien (retain only for specific charges).

Banky’s Understanding: General lien (Sec 171): Banks can retain goods as security for general balance of account — i.e., for ANY debt the customer owes. Given to banks, factors, wharfingers, attorneys, policy brokers. Particular lien: Right to retain only for charges/dues that arose from THOSE specific goods. Conditions: (1) Property came to bank as creditor, (2) No special purpose inconsistent with lien, (3) No contract excluding lien, (4) Same capacity/right as the account.

Banky’s Understanding: Lien CANNOT apply to: (1) Safe custody articles (bank is trustee/bailee — no lien unless special agreement). (2) Specific purpose deposits (money deposited for a particular purpose). (3) Articles left negligently in bank premises. (4) Immature debts (debt not yet due). (5) Stolen goods (even if received in ordinary course). (6) When set-off is available — lien and set-off cannot be exercised simultaneously.

Banky’s Understanding: Right of Set-off (exam PYQ!): Bank adjusts debit balance in one account with credit balance in another of the SAME customer. Auto on: death, insanity, insolvency, garnishee order, assignment notice. Available: Same person different names, proprietor vs proprietorship, partner in firm (credit) vs firm (debit). NOT available: Partnership firm vs individual partner, trust vs trustee, minor (guardian operated) vs guardian, joint account vs one holder, dividend A/c vs company loan.

Banky’s Understanding: Right of Appropriation: When customer has multiple debts and makes a payment: (1) Customer can specify which debt to pay first. (2) If customer doesn’t specify → bank can appropriate (apply to any debt). (3) If neither specifies → payment applies to earliest debt first (chronological order). In running accounts (like CC/OD): Clayton’s Rule applies — new credits discharge the oldest debits first.

Banky’s Understanding: Clayton’s Rule: In running accounts (cash credit, overdraft), new credits are applied to discharge the oldest debits first. This is important because: if a partner dies and the firm’s CC account continues, new credits after death reduce the deceased partner’s liability (oldest debits). Bank should STOP the account on death to crystallise liability, and open a new account. Otherwise Clayton’s rule reduces the estate’s liability for old debts.