Bank duty of care to customer and the construction of exemptions, indemnities and entire agreement clauses (The Federal Republic of Nigeria v JP Morgan Chase Bank)

Bank duty of care to customer and the construction of exemptions, indemnities and entire agreement clauses (The Federal Republic of Nigeria v JP Morgan Chase Bank)

The decision of the High Court in the case of The Federal Republic of Nigeria v JP Morgan Chase Bank, NA although an application for summary judgment and clearly (given the enormous sums at stake) the opening salvos of what might turn into a protracted legal battle discusses some important points which banks and other financial institutions will need to consider where they use terms and conditions which seek to narrow duties to their customers. As the case progresses to a full trial it will be interesting to see how the Courts construe the bank’s exculpatory clauses and assess their interaction with the law relating to implied terms and tortious liability.

The Federal Republic of Nigeria v JP Morgan Chase Bank, NA [2019] EWHC 347 (Comm)

What are the practical implications of this case?

Two preliminary points should be borne in mind about this case.

Firstly, the judgment was on an application for reverse summary judgment by the bank against the claimant ie a strike out application where certain facts are assumed rather than proven.

Secondly, the facts of the case are unusual in that the bank’s customer was a state, the sums involved were over $875m and everyone agreed that corruption and fraud by some of the officers of the state was ultimately responsible for the loss to the Nigerian people.

Despite these two factors the case is likely to be of interest to anyone advising on the ability of a bank to limit its contractual and non-contractual duties to its customers through the use of some standard contractual clauses commonly found in the terms and conditions on which banks accept deposits.

In particular the case discusses:

  • a bank’s Quincecare duty of care when it made three transfers from an account at a time when the bank had (or was assumed to have) reasonable grounds for believing that the payments out of its customer's account were defrauding the customer (Barclays Bank plc v Quincecare Ltd [1992] 4 All

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login

About the author:

Meet Miranda:

1. Banking and finance lawyer with experience in leveraged finance, real estate finance and restructuring

2. Likes Spanish cooking, playing the piano and planning adventures

3. Thinks the law is a necessary evil

Miranda is a solicitor specialising in leveraged and acquisition finance. She trained at Hogan Lovells International LLP and qualified into the international banking and finance team. During her time at Hogan Lovells she worked on a variety of domestic and cross-border transactions, acting for both borrowers and lenders. She also experienced secondments to Barclays Bank PLC and Kaupthing Bank hf.