Banker's lien

A banker's lien is a legal right arise in many common law jurisdictions of a bank to exercise a lien over any property in the custody of the bank as security. Lien is of two types:

1. Particular lien
2. General lien

Particular lien confers to retain the goods in connection with which a particular debt arose i.e. A particular lien applies to one transaction or certain transaction only. e.g. a tailor has the right to certain the clothes made by him for his customer until his tailoring charges are paid by customer.

Scope

The precise effect of a banker's lien varies according to the laws of a particular jurisdiction. Under English common law it applies to all property coming into the possession of the bank in the usual course of banking business,^[1] subject to the important exception that it does not apply to property which is deposited with the bank for safe custody.^[2]

Whilst most common law liens normally only give the lienee a passive right to retain the property, unusually, the banker's lien permits the bank to sell the relevant property.^[3]

The lien does not generally extend to intangible rights, including credit balances on accounts. However those credit balances may be subject to the banker's right to combine accounts.^[4]

The banker's lien may be modified or abrogated by agreement.^[5]

References

• Banks portal

1. Brandao v Barnett (1846) 12 Cl 7 F 787
2. Leese v Martin (1873) LR 17 Eq 224 at 235. The bank holds such property as bailee, and may be entitled to exercise a separate lien as such.
3. Rosenberg v International Banking Corporation (1923) 14 Ll LR 344 at 347
4. National Westminster Bank Ltd v Halesowen Presswork & Assemblies Ltd [1972] AC 785
5. E.P. Ellinger; E. Lomnicka; C. Hare (2011). Ellinger's Modern Banking Law (5th ed.). Oxford University Press. p. 864. ISBN 978-019-923209-3.