Clydesdale Bank v Black, [2002] ScotCS 129
Citation: Clydesdale Bank v Black, [2002] ScotCS 129
Rule of thumb 1: If an organisation is part of an association, and the association has a code of conduct/ethics, do the organisation actually have to follow this with their clients? Yes, these are deemed to be implied terms of contract.
Rule of thumb 2: Does the Code on Banking practice have any legal significance? Yes, these are implied terms of contract which banks must follow.
Judgment:
Banks are expected to follow the good banking trade association code which is deemed to be implied terms of the contract, and if they do not do so, they are expected to have a good reason for not doing so, ‘The reference which Lord Clyde makes to the practice of banks is a reference to the Code on Banking Practice adopted by banks in Scotland in March 1992. The terms of paragraph 12.1 of that Code are set out in O'Brien at p.197-8 and it is apparent that the terms of the guarantee and Standard Security in the present case follow almost word for word the recommendation in the Code’, Lord Sutherland.
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