This case involves 15 cheques that were drawn by Lord Terrington on behalf of his client, Reckitt, but were used to pay Lord Terrington's personal debts. Midland Bank paid the cheques and sought to rely on section 82 of the Bills of Exchange Act to avoid liability. However, the court found that Midland Bank should have been on notice of the limited authority of Lord Terrington based on the signature and they were negligent for not making inquiries. Therefore, Midland Bank failed to show they received the cheques in good faith and without negligence as required by section 82. The appeal was dismissed.

1. Midland Bank v RECKITT
Aziza Ahmed Al Mahrooqi
Appeal case

2. Client (principal)
‘RECKITT’ Attorney (agent)
‘Lord Terrington’
Cheques
A rubber stamp
" Harold G. Reckitt by
Terrington, his attorney." 15 ChequesSignature between lines

3. Pay cheques
Overdraft
Bring an action
Banker

4. V
Reckitt T & Midland Bank
The defendants relied on s. 82 of
the Bills of Exchange Act, 1882,
claiming that the cheques were
crossed cheques and that they
had received payment of them in
good faith and without
negligence.
He brought an action
against the defendants for
damages for conversion of
the MIDLAND cheques +
to recover the amount of
15 cheques

5. Principal's executor

6. The executor
(claimant)
fifteen cheques were drawn
fraudulently and wrongfully and
were paid by Lord Terrington for his
own private purposes into his
account with the appellant.
were guilty of
(a)conversion of the cheques
(b) negligence in the collection
of the cheques
‘Lord Terrington’
Midland Bank

7. Midland Bank
(respondent)
denied any conversion or
negligence, and they alleged that
they received payment of the
cheques, which were crossed, for
their customer in good faith and
without negligence and were
protected by s. 82 of the Bills of
Exchange Act, 1882.

8. Sect. 25 of the Bills of Exchange Act, 1882, provides that ;
" a signature by procuration operates as notice that the
agent has but a limited authority to sign, and the principal is
only bound by such signature if the agent in so signing was
acting within the actual limits of his authority."

11. The court held ;
the defendants were liable for the amounts of the cheques as
damages for conversion ;
1- should had notice of the limited authority of Lord T to deal with
such cheques.
2-they were negligent in not making any inquiry.
3-therefore failed to bring themselves within s. 82 of the Bills of
Exchange Act, 1882.

12. Midland Bank
(appellant)
V
Reckitt
(defendant)

13. Legal analysis..
Appellant claims..!

14. How can expect if there is a breach
of trust from the beginning?!
The circumstances of the case..
In the present case the appellant rely on;
1- from the principal side..
2- from the agent side..
3- ratification clause..
On these grounds;
1-the appellants are entitled to the protection of s. 82 of the Bills of
Exchange Act, 1882.
2-the appellants cannot be held liable as having prima facie notice
of a breach of trust.

15. What are the agent authorities -in this case-;
1-To apply any moneys which shall come to the hands
of the attorney ….
2-To deposit any moneys received by the attorney ….
3- To draw, accept, endorse, negotiate, retire, pay or
satisfy any bills of exchange promissory notes cheques
drafts…..
Then, the principal by his executor ratifies
and confirms such agent acts

16. conclusion of all the members of the House when he says:
" It is clear
(1.) that the cheque was used to liquidate the private debt
of Lord Terrington,
(2.) that the defendants knew it was so used, and
(3.) that the form of the cheque gave them notice that the
money was not the money of Lord Terrington. In that state
of circumstances there is no evidence or any possible
inference which can be drawn that the agent was applying
his principal's money in discharge of any possible liability of
his principal."

17. For the above reasons; what do you think for the
appeal??
‘ I think that the appeal should be dismissed’.