NATIONAL OPEN UNIVERSITY OF NIGERIA
PLOT 91, CADASTRAL ZONE, NNAMDI AZIKWE EXPRESS WAY, JABI – ABUJA
FACULTY OF LAW
DEPARTMENT OF COMMERCIAL LAW (PPL)
OCTOBER/NOVEMBER EXAMINATION 2016
COURSE CODE: LAW 431 (CIL 431)
COURSE TITLE: LAW OF BANKING AND INSURANCE I
CREDIT UNIT: 4
TIME ALLOWED: 2 ½ HOURS
INSTRUCTIONS: ANSWER FOUR QUESTIONS ONLY. QUESTION ONE IS COMPULSORY
Mr. Idi purchased some furniture from Mr. Bala. Mr. Idi issued Mr. Bala with a cheque belonging to Horse Bank, drew two parallel lines across the face of the Cheque, and instructed Mr. Bala to take it to Horse Bank for payment. The next day, Mr. Bala proceeded to Elim Bank, his own Bank, to cash the cheque. On reaching his Bank, Mr. Bala was told that the cheque was unacceptable.
Discuss the issues involved
Would the position had been different if a Banker in Horse Bank had again drawn two parallel lines on the face of the cheque issued by Mr.Idi?
The relationship of Banker and Customer creates rights and obligations:
Discuss the nature of the relationship of the Banker and the Customer
With the aid of decided cases discuss the types of relationship that exist between the banker and customer.
3a. What is a negotiable instrument?
b. Mention the elements of negotiable instruments. 15 Marks
4a. Compare and contrast between a Loan and an Overdraft.
Discuss the banker’s evaluation of credit worthiness taking into considerations the canons of lending. 15 Marks
5. Allied Bank has been in existence for 100 years. The Bank has catered for the needs of its teeming customers by providing loans, overdraft and other bank services. Having been found reliable, many of the bank’s customers applied for loan facilities from the Bank, which was approved and granted. Unfortunately, the Bank has been unable to recover its money as a result of non-refund and non-payment of loan collected by the customers. The Bank, in order to protect the interest of its stakeholders, has decided to further secure loans and mortgages by ensuring payment of loans collected using good banking security. As an expert engaged by the Bank, advise the Bank on the essential requirement of a good security as an assurance of repayment. 15 Marks
6. With the aid of decided cases attempt the definition of Guarantee and the Basis for the Guarantor’s liability. 15 Marks.
Use Past Questions to see how examiner asked questions in the past
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