Course Title: Law of Banking
Course Code: BUL 304
Course Status: 4 Credits
Lecturers: - HAMZAH ADESOLA DAWOOD*
S.M. OLOOKOBA**
*Lecturer II; LL.B, (LAGOS), LL.M (ZARIA), BL (LAGOS)
**Lecturer II; B.A; LL.B; P.G.D.E (Unilorin), LL.M. (Ife) BL (Abuja)
Department of Business Law,
Faculty of Law,
University of Ilorin,
Kwara State, Nigeria.
E-mail: -
*adedawood@yahoo.com
* *sakaskydlaw2002@yahoo.com
Office Location: -
*Room 2G12, Wing 2 (Old Complex), Faculty of Law
**Room 2G12, Wing 2 (Old Complex), Faculty of Law
Consultation hours: - *Tuesdays, 12p.m – 2pm. **Mondays 2pm-4pm
*Thursdays, 2p.m – 4pm.** Wednesdays 12pm-2pm
Prepared By:
K.O AKANBI (MRS)
Course Contents: Nature and legal effects of negotiable instruments, including cheques,
promissory notes, bills of exchange, e.t.c., negotiability and assignability; endorsement and
delivery; presentment and notice of dishonor, Banking.
Course Description: - This Course is an elective course to be taken in the second semester as
part of Banking Law. The Course is designed basically to examine the negotiable instruments
used in the course of banking. Also, some of the reforms in the banking industry in Nigeria
will be examined.
Course Justification: -
Contemporary banking has become an integral part of modern living. This is more as a result
of rapid technological, industrial and economic growth globally. In fact, the industry has
assumed a sophisticated dimension due to the emergence of the concept of globalization. The
law as the opium of the society has risen up to the challenge by prescribing certain norms of
practice and regulations governing the industry. It is in view of this salient fact,that it
becomes imperative that law students are exposed to the operations of banks, the legal nature
of instruments used by banks and some important reforms made so far in Nigeria in the
banking industry.
Thus, at the end of the course students are expected to have adequate knowledge of the use
and legal nature of negotiable instruments like cheques, bils of exchange, promissory notes
e.t.c The course will also enable the students to understand and appreciate some of the basic
reforms that the Nigerian banking industry has witnessed with a view to devising innovative
ideas that might further enhance and develop the Nigerian banking system to meet with the
dynamics of the times.
Course Objectives:
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The students should be able to understand what negotiable instruments are.
The students should also be able to appreciate legal issues on negotiability and
assignability.
The students should be able to understand the legal effect and use of cheques,
promissory notes, bills of exchange and other kinds of negotiable instruments.
The students should be able to appreciate and understand the recapitalisation process
and its impact on the Nigerian banking industry.
The students should also be able to understand the Islamic banking system.
The students should be able to understand and appreciate some of the landmark
reforms which the Nigerian government has made in banking.
Course Requirement:This is an elective course for law students in year three. The students are expected to have
minimum of 75% attendance to be able to write the final examination. The students must be
involved in the preparation, participation and presentation of seminar in the class including
general discussion. They will also be expected to treat study questions and assignments.
Students are also expected to have e-mail accounts.
Method of grading
NO.
ITEMS
SCORE %
1
Class attendance
5
2
3
4
5
Class participation
Continuous assessment
Final examination
Total
5
20
70
100
Course Delivery Strategies: 
The lecture shall be interactive.

Discussions shall also be held in form of seminar presentations, and to achieve this,
students shall be divided into groups provided during lecture. Students will be
encouraged and required to read around the topics, follow the provisions of law and
recent cases that are relevant to the topics. Relevant materials shall also be made
available to the students.
Seminar Schedule: Students are going to be divided into groups of maximum ten students
per group, topics will be given to the groups for presentation and discussion in class.
LECTURES
Week 1: Money transmission and its legal mechanism
Objectives:
 To enable students appreciate in detail the ways by which banks carry out their
transactions.
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The students should be able to understand what negotiable instruments are.

The students should also be able to understand the various legal instruments with
which banks operate.

The students should also be able to differentiate one legal instrument from another
especially as regards the specific role each performs.
Description of the Topic:
The topic will examine the ways by which banks carry out their business, the process of
money transmission and meaning of negotiable instruments. Also, the bank clearing system
will be discussed. Some negotiable instruments like bills of exchange, promissory notes, bank
drafts and cheques will be briefly introduced.
Study questions:
1. Identify and discuss three characteristics of negotiable instrument?
2. Compare and contrast the characteristics of Promissory Notes and Bill of Exchange.
3. If a cheque is an unconditional order in writing, addressed by a customer to his bank,
in what ways crossed-cheque is different from cheque?
Case/Statute List:
Nwokorie v. Nwaneri (1967), 1 AL. R. comm. 173;
Agbafe v. Viewpoint Nig. Ltd., (1977) NCLR 93;
Goodman v. Eban (1954) 1 QB 550;
Akbar Khan v. Attar Singh (1936) 2 All E.R. 545;
Soaga v. Fasasi,(1976) 8 C. C. H.C.J. 2209;
Daarnhouwer & Co. Ltd. v. J. Christian & Co. Ltd and Mandilas & Karabaris Ltd. (1967). 1
ALR Com 434.
Bill of Exchange Act Cap B8 LFN 2004
Companies and Allied Matters Act. Cap C20 LFN 2004
Week2: Negotiable Instruments.
Objectives:
 The students should be able to appreciate the term negotiable instruments.
 The students should be able to distinguish one negotiable instrument from another.
 The students should also be able to understand the law and practice of negotiable
instruments as contained in the Act.
Description of the Topic:
The term negotiable instrument will be examined, various kinds of negotiable instrument will
be discussed with the features of each examined. Finally, the provisions of the Bills of
Exchange Act as regards the law and practice of negotiable instruments will be discussed.
Study Questions:
1. A negotiable instrument is one the property in which is acquired by anyone who take
it bona fide, and for value, notwithstanding any defect of title in the person from
whom he took it, from which it follows that an instrument cannot be negotiated unless
it is such and in such a state that the true owner could transfer the contract or
engagement contained there by simple delivery of the instrument.
Explain in detail what you understand by the term negotiable instruments stating also
its main features.
2. Promissory notes and a bill of exchange are both negotiable instruments. However,
there are differences between the two. First, in a promissory note, there are two
parties, the maker and the payee. In a bill of exchange, there are three parties, drawer,
drawee and payee.
Give at least 5 distinctions and similarities between a promissory note and a bill of
exchange.
With the aid of the above statement, explain with examples, what you understand by the term
negotiable instruments.
Case/Statute List:
Bills of Exchange Act Cap B8, L.F.N 2004
Week 3: Cheque
Objectives:
 The students should be able to understand the uses of cheques.
 The students should also be able to understand the various forms of cheques.
 The students should able to appreciate the features of a cheque
 Finally, the students should be able to appreciate the main principles of law relating to
cheque.
Description of the Topic:
The topic will examine the meaning, uses and features of cheques, also the various forms of
cheques will be analysed. The rules governing cheque like who may issue it, the holder of
cheque, dating of cheque, delivery and endorsement are some of the issues that will be
examined.
Study Questions:
 Sunday Bada is an illiterate trader who has just opened an electronics shop in Taiwo
road. On September 1 st, 2010, Hajia Ladidi walked into his shop to purchase the latest
plasma television set. After agreeing on the price of 60,000:00, she issued him a
cheque and left. After Ladidi left, Sunday examined the cheque and discovered that it
was dated on a Sunday.
He is now afraid that he may not be able to cash the cheque. Enlighten him on the
issue of dating a cheque.
 ‘Although every holder of a cheque is necessarily the possessor of it, the possessor of
a cheque is not necessarily the holder thereof’
Give a critical analysis of the above statement.
Week4: Bills of Exchange and Promissory Notes
Objectives:
 The students should be able to understand what bills of exchange are.
 The student should also be able to appreciate and distinguish a bill of exchange from a
cheque.
 The students should be able understand that though a cheque is a form of bill of
exchange, not all bills of exchange are in form of cheques.
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The students should also be able to understand and appreciate the main principles of
law relating to bills of exchange.
The students should also be able to understand the main principles of law relating to
promissory notes.
Description of the Topic:
The collection, discounting and payment of negotiable instruments form a substantial part of
the work of a bank. Bills of exchange and promissory notes are forms of negotiable
instruments. The topic will examine meaning nad types of bills of exchange, distinctions
between a cheque and a bill of exchange, meaning and principles of law relating to bill of
exchange and promissory notes.
Study question:
‘In paying their customer’s acceptances in the usual way, bankers incur a risk perfectly
understood and in practice disregarded. Bankers have no recourse against their customers if
they paid a genuine bill to a person appearing to be the holder, but claiming through or under
a forged endorsement. The bill is not disregarded, the acceptance remain liable, the banker
has simply thrown his money away’
Comment on the validity of the above as it relates to bills of exchange.
Case/Statute List:
Bank of England v.Vagliano Brothers (1891) AC107
Week 5: Study in Modern Banking System: Electronic Banking
Objectives:
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To enable student to have the knowledge of modern trends in banking business, with
particular emphasis on the emergence of the e banking system.
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The students should understand aspects of electronic banking like the automated teller
machines, smart cards and network based banking.
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The students should also appreciate the consequential malpractices as a result of its
abuse.
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The students should also be able to discern the legal effects in terms of sanctions that
accompany malpractices.
Description of the Topic:
The traditional banking system will be examined as the foundation, then the contemporary
electronic banking system will be analysed, the ATMs, Smart Cards, Electronic Funds
Transfer, Telebanking and Mobile banking are some of the things that will be examined in
this topic. Also, the inherent abuses and malpractices will be discussed. The legal
implications of such abuses will also be dealt with. Finally, the lecture will be summarized
and concluded.
Study Questions:
1.
Electronic Banking has revolutionized functions of the banking sector. It has
however posed some serious challenges. Discuss in detail the functionality and
challenges of e-banking and suggest some of the legal framework to meet the
challenges.
Mention some of those malpractices and devise effective ways of combating them.
2.
‘In Nigeria as in other parts of the world, the banking industry has come to
recognise the importance of integrating modern information and communication
technology into their operations. Thus, in recent years, the growth of computer
knowledge acquired has added importance to the expansion of retail banking
delivery systems and the development of new electronic retail products and
services. The ability to deliver modern automated technology products efficiently in
a reliable manner has become the fulcrum of the marketing strategies of virtually all
banks.’ GOLDFACE-IROKALIBE. Law of Banking in Nigeria.
Discuss the above statement in the light of contemporary electronic banking system of
Nigerian banks.
Case/Statute List:
Nigerian Advertising Service Limited v. United Bank for Africa Limited (1968) 1 ALR Comm
6;
Lloyd v. Grace Smith (1911-13) All E.R. Rep. 51;
Chief Edu v. National Bank of Nigeria Limited and West African Travel Agency Limited
(1971) 1 All NLR 56.
Economic and Financial Crimes Commission Act 2004
Companies and Allied Matters Act Cap C20 LFN 2004.
Banks and other Financial Institution Act. Cap B3 LFN 2004
Week 6: Legal framework of the Recapitalisation process
Objectives:
 The main objective is to expose the students to the legal framework of the
recapitalization process.
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The students should also be able to understand the background development leading
to the recapitalization
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The students should also be able to appreciate the effect of recapitalization on the
financial sector as well as on then economy as a whole.
Description:
The policy objectives of recapitalization will be analysed, then the legal framework will be
examined, mergers and acquisition, take overs and the effect of recapitalization on the
Nigerian banking industry will be discussed.
Study Questions:
1. Discuss in detail the factors that led to the introduction of recapitalization policy
among the Nigerian banks.
2. Examine the roles expected of the Central Bank of Nigeria to play in the
implementation of the recapitalization policy, citing the relevant sections of the
Central Bank Act.
3.
Discuss the guiding principles of merger and acquisition as a result of the
recapitalization policy?
Case/Statute List:
Cheseborough Industries Limited V. Lever Brothers (Nigeria) Limited (Unreported, Suit No.
FHC/L/M49/88 OF 14 Nov. 1988);
Re Anglo continental Supply Company Limited {1922} 2 Ch. 723;
Re-Bendel Line Co. Limited; The Bendel Intra-city Bus Service Limited, Trans-Kalife limited
{5 FRCR (1979) 19)};
John Holt Investment Limited and John Holt limited. (unreported, Suit No. FHC/L/11681, 87
of 18, may 1988);
Hogg V. Cramphorn limited (1966) 3 All E.R. 420; Bamford V. Bamford. (1968) 2 All E.R.
655.
Central Bank of Nigeria Act, 2007
Investment and Securities Act Cap 124 LFN 2004
Companies and Allied Matters Act Cap C20 LFN 2004.
Week 7: Legal framework of the Recapitalisation process II
Objectives:
 The students should be able to understand the challenges of the recapitalization
process.
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It is expected that students will be able to analyse the gains and pitfalls of the
recapitalization process.
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It is expected that students having had a sound grasp of the legal framework of the
recapitalization process, will be able to predict the future of the Nigerian banking
sector.
Description of the Topic:
The topic starts with analysis of the challenges of recapitalization, the gains and shortcomings
and its general impact on the Nigerian economy will also be examined.
Study questions:
1. Banking malpractices, even where they result in pecuniary gains for their perpetrators,
are usually negative in their overall effect on the economic life of any nation. They
affect the depositors, the other creditors of the banks, the banks themselves and the
national economy at large.
Discuss the most prevalent malpractices in Nigeria and suggest ways to combat same.
2. The recapitalization policy of the federal Government of Nigeria has revolutionized
the banking sector and by extension the Nigerian economy at large. It has never the
less posed some serious challenges. Discuss in detail some of the challenges/problems
of the recapitalisation policy.
Case/Statute List:
Cheseborough Industries Limited V. Lever Brothers (Nigeria) Limited (Unreported, Suit No.
FHC/L/M49/88 OF 14 Nov. 1988);
Re Anglo continental Supply Company Limited {1922} 2 Ch. 723;
Re-Bendel Line Co. Limited; The Bendel Intra-city Bus Service Limited, Trans-Kalife limited
{5 FRCR (1979) 19)};
John Holt Investment Limited and John Holt limited. (unreported, Suit No. FHC/L/11681, 87
of 18, may 1988);
Central Bank of Nigeria Act, 2007
Investment and Securities Act Cap 124 LFN 2004
Companies and Allied Matters Act Cap C20 LFN 2004.
Week 8: TEST
Objectives:
 The objective is to assess the students on all the areas treated so far with a view to
discovering areas that might need further and better attention.
 To test the level of the students understanding of the topics.
 To further broaden the knowledge of the students on the topics previously treated.
Week 9: Banking Reforms
Objectives:
 To enable the students understand contemporary banking reforms in Nigeria.
 The students should also be able to understand the challenges faced in implementing
the various reforms.
Description of the Topic:
The topic will analyse some of the reforms that the banking industry in Nigeria has faced.
The topic will also deal with the challenges that have hindered the optimum implementation
of such reforms.
Study Questions:
1. Malpractices had become recurring phenomena in the recent time especially among
the stakeholders including, the bank employees, outsiders (non-bank employees) and
banks themselves. Discuss the above in the light of contemporary reforms in the
Nigerian banking sector.
2. ‘As industrial and commercial activities grew, so also the banks expanded and corrupt
activities expanded with them. Banks as custodians of money deposits of people
began to form cartels. Bank owners became so powerful that they became
kingmakers. They were so powerful to influence political, economic and social
policies of many countries of the world. They also began to loan out money to their
cronies and corporate organisations for the achievement of their ultimate selfish
aggrandisement for power and material acquisitions.’
Justify the need for a reform in the Nigerian banking sector in the late eighties and early
nineties.
Week 10: Implications of the Banking Reforms
Objectives:
 To enable the students able to discern the legal implications of the reforms.
 The students should also be able to understand the economic and legal implications
of the reforms.
 Finally, it is expected that the students will have a more detailed understanding of the
major banking reforms in Nigeria.
Description of the Topic:
The topic will essentially examine the legal, economic and political implications of the
reforms in the banking sector in Nigeria.
Study Questions:
1. Explain a major reform of the Nigerian banking industry and the implication on the
economic growth and development of Nigeria.
2. Round tripping of funds was an endemic component of Nigeria’s banking and
financial system. In fact, it hindered the development of foreign investment in Nigeria
as it was used to siphon foreign exchange from Nigeria to foreign banks. It has
however been abolished. However, foreign exchange is being siphoned outside the
shores of the country through other means.
Justify therefore the need for a continuous reform in the Nigerian banking and sub
banking sector.
Case/Statute
Banks and Other Finacial Institutions Act Cap B3 LFN 2004
Companies and Allied Matters Act Cap 20 LFN 2004
Week 11: Micro finance Banks (MFBs) in Nigeria.
Objectives:
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To introduce the students to this innovation in the banking system in Nigeria.
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To enable the students understand the nature of the transactions of the micro finance
bank.
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To enable the students appreciate the legal framework within which the microfinance
banks operate.
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To sharpen the students analytical skills by exposing them to the challenges affecting
the operations of this banks with a view to proffering solutions.
Description of the Topic:
The legal framework of micro finance banks will be discussed; then, transactions of the bank,
limitations and challenges being faced by the bank will be examined. Recommendations for
optimum performance shall also be discussed.
Study Questions:
1. Discuss in details the permissible and prohibited activities of the stakeholders in the
Micro-finance scheme with relevant sections of the enabling regulatory and
supervisory guidelines for Micro-finance Banks in Nigeria.
2. The objectives for setting up micro finance banks in Nigeria have been met in the
light of the performance of the banks so far.
Discuss the above statement.
Case/Statute List:
Regulatory and Supervisory Guidelines for Micro-finance Banks in Nigeria
Companies and Allied Matters Act Cap 20 LFN 2004
Week 12: Islamic Banking
Objectives:
 To enable the students appreciate the nature of and transactions of the Islamic banking
system.
 The students should also be able to appreciate the legal framework of Islamic banking
system.
 The students should be able to understand the salient differences in the practice and
procedure of Islamic and conventional banks.
 To enable the students appreciate the historical framework of Islamic banks in
Nigeria.
Description of the Topic:
The history and legal framework of Islamic banking system in Nigeria will be examined. The
nature of the transactions of Islamic banks will also be discussed. Finally, the salient
differences between conventional banking system and Islamic banking system will be
discussed.
Study Questions:
1. Give a critical analysis of the legal framework for Islamic banking system in Nigeria.
2. It has been suggested that the Islamic Banking system is imperative in today’s
Nigeria. Discourage or justify the need for the introduction and adoption of the
Islamic banking system in Nigeria.
Case/ Statute List:
Banks and Other Finacial Institutions Act Cap B3 LFN 2004
Companies and Allied Matters Act Cap 20 LFN 2004
The Central Bank of Nigeria Act 2007
Week 13 and 14: REVISION
Objectives:
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To refresh the students memory on all the topics previously treated.

To test the level of the students understanding of the topics.

To further broaden the knowledge of the students on the topics previously treated.
DESCRIPTION:
There will be a general discussion of all the topics treated throughout the semester. Students
are expected to seek explanation on any difficult concept or topic treated during the course.
Week 15: Examination
Objective:
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The students are examined at the end of the semester on all the topics taken
throughout the semester.
READING LIST:
1. Goldface-Irokalibe, I.J Law of Banking in Nigeria, (Malthouse Press Limited, 2007).
2. Afolabi, L Law and Practice of Banking (Heinemann Educational Books (Nigeria)
Plc., 2005)
3. Cranson, R Principles of Banking Law (Oxford University Press, New York, 1997).
4. Milnes Holden, J The Law and Practice of Banking (Pitman Publisher 1996)
5. Law of Banking Services – The Principles (Billing & Sons Ltd., Worcester 1991).
6. Tugbiyele, T.A.O Law of Banking (T.A.O., Tughiyele & Co. Lagos, 2007)
7. Olakanmi & Co Banks & Other Financial Institutions Act, 1991 (BOFIA) & Central
Bank of Nigeria Act, 2007 (LawLords Publications, 2007)
Statutory Laws:
 Banks & Other Financial Institutions Act, 1991 (BOFIA)
 Central Bank of Nigeria Act, 2007
 Dishonored Cheques (Offences) Act 1977
 Banking Act, 1969; Banking Amendment Decree 1990 Part V.
 Bills of Exchange Ordinance No. 38 of 1917.
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Bills of Exchange Act of 1958, Cap. 21 Laws of the Federation of Nigeria and
Lagos State Ordinance of 1917.
Evidence Act of 1958; Cap 62 Law of the Federation of Nigeria and Lagos
Banking Ordinance No. 15 of 1952.
Banking Act of 1958 Cap. 19 Laws of Federation of Nigeria and Lagos.
Economic and Financial Crimes Commission Act 2004
Investment and Securities Act 2007
Companies and Allied Matters Act Cap C20 LFN 2004.