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1st right of appropriation more..........

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  • 1st right of appropriation more..........

    Easy to read and understand-

    Appropriation is the right to apply a credit to a particular debt. The first right of appropriation belongs to the customer, if they do not appropriate the bank then assumes the right, if neither appropriate then Clayton’s Case (Devaynes v Noble 1816) applies. Appropriation can be express, such as writing the account number on a slip or implied, depositing exactly the same amount as a written cheque on an overdrawn account. Either way the customer is clearly stating which debt he wishes to apply the credit to. Upon insolvency the customer loses the right to appropriate, for example in the allocation of proceeds resulting from the realisation of security; Re William Hall Contractors.
    Clayton’s Case applies where there is a single, running, current account and states that if neither party appropriate then credits are applied to debits in strict chronological order, the oldest debits cleared by the earliest credits. This can be of particular importance when an overdrawn account is made up of both preferential and non-preferential debts (such as cheques paid for wages mixed in with normal trade debts) and a decision needs to be made as to the preferential element of the bank’s debt.

    5www.ciobs.org.uk/qualifications/pastpapers/AssociateshipExamsAutumn2006.pdf

  • #2
    Re: 1st right of appropriation more..........

    Sorry, the link should be
    http://www.ciobs.org.uk/qualifications/pastpapers/AssociateshipExamsAutumn2006.pdf

    Comment


    • #3
      Re: 1st right of appropriation more..........

      This is a right we do have but with not many customers using it, the banks seem to be unaware of this right, although they should be.

      I believe you also need to request appropriation every time a payment is made or funds are allocated to the account.

      So maybe a letter to the bank once a month would suffice but unsure as I have never used this myself.

      Comment

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