What Are The Relationships Between Debtor And Creditor, Principal And Agent, Bailer And Bailment?


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The general relationship between banker and customer is primarily that of a debtor and creditor. When customer deposits money with a bank, the bank then is the debtor and the customer is creditor. The customer expects from the bank that his money will be kept safe by the bank. It will be returned on demand within business hours. The money will be intact and safe and will fetch something by way of return. The position is reversed if the customer is advanced loan then the banker becomes the creditor and the customer is the debtor.

The special relationship between the customer and the banker is that of principal and agent. The customer deposits cheques, drafts and dividends for collection with the bank. He also gives written instructions to the bank to purchase securities, pay insurance premium instalments of loans on his behalf. When the bank performs such agency services he becomes an agent of his customer.

A bailment is the delivery of goods in trust. A bank may accept the valuables of his customers such as Jewellery, documents, securities for safe custody with it. In such a case the customer is the bailee and the bank is the bailee. The bank charges a very small amount as service charges for safe custody of the valuable from his customers. This relationship between the bank and the customer as bailee and bailer started from the days of earlier goldsmith.

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