Commentary

11 The rule in Clayton’s case

BANKING vol 4(1)
| Commentary

11 The rule in Clayton’s case

| Commentary

11 The rule in Clayton’s case

The rule in Clayton’s case1 creates a presumption as to the appropriation of payments into a running account being attributable to the repayment of the oldest debits from the account. In other words, first out repaid by first in. This rule can have prejudicial effects on all security but especially a bank guarantee. Thus absent a term providing that the guarantee is to constitute continuing security the turnover through a running account such as an overdraft coupled with the operation of the rule in Clayton’s case will mean that credits would go

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