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Banque Worms v BankAmerica International: Difference between revisions
Banque Worms v BankAmerica International (view source)
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On 10 April 1989, at 12:36 am, Spedley instructed its bank, SPI, to wire the total amount due to the Banque at its BankAmerica International account. By 3:37 am the same day – not three hours later – Spedley had a change of heart and instructed SPI to stop payment to Banque Worms and instead make a payment in the same amount to National Westminster Bank USA.” | On 10 April 1989, at 12:36 am, Spedley instructed its bank, SPI, to wire the total amount due to the Banque at its BankAmerica International account. By 3:37 am the same day – not three hours later – Spedley had a change of heart and instructed SPI to stop payment to Banque Worms and instead make a payment in the same amount to National Westminster Bank USA.” | ||
You won’t believe this, but notwithstanding the second instruction SPI went ahead and wired the full amount to BankAmerica. Can you imagine it? | You won’t believe this, but notwithstanding the second instruction SPI went ahead and wired the full amount to BankAmerica. Can you imagine it? About two hours after ''that'' SPI informed BankAmerica of the mistake and asked for the money back. ''Assuming that BankAmerica would send the money back'',<ref>Don’t ''arseyoume'', kids: it makes an “arse” out of “you” and “me”. Actually, given that its first instruction was in breach of mandate, it was obliged to send the money to NatWest whether it got it back or not.</ref> SPI then sent the exact same amount to National Westminster Bank USA as well. | ||
Banque Worms refused to return the money and invoked the famous [[discharge-for-value defense]]: it was a creditor with a right to the payment from Spedley. | |||
SPI argued that it was entitled to a return of the payment under restitutionary principles unless Banque Worms had relied on the payment to its detriment, and it hadn’t. The New York Court of Appeals considered that section 14 of the ''Restatement of the Law of Restitution''’s description of the discharge-for-value defense as applying in the case. That provides: | |||
{{quote|{{Restatement of Restitution Section 14}}}} | |||
{{sa}} | |||
*[[discharge-for-value defense]] | |||
*[[Revolving credit facility]] | |||
{{a|casenote|}}Banque Worms involved a [[revolving credit facility]] between Spedley and the Banque. In 1989 the Banque Worms informed Spedley that it would not be renewing the [[revolver]] and demanded payment of the outstanding balance on April 10, 1989. | |||
On 10 April 1989, at 12:36 am, Spedley instructed its bank, SPI, to wire the total amount due to the Banque at its BankAmerica International account. By 3:37 am the same day – not three hours later – Spedley had a change of heart and instructed SPI to stop payment to Banque Worms and instead make a payment in the same amount to National Westminster Bank USA.” | |||
You won’t believe this, but notwithstanding the second instruction SPI went ahead and wired the full amount to BankAmerica. Can you imagine it? About two hours after ''that'' SPI informed BankAmerica of the mistake and asked for the money back. ''Assuming that BankAmerica would send the money back'',<ref>Don’t ''arseyoume'', kids: it makes an “arse” out of “you” and “me”. Actually, given that its first instruction was in breach of mandate, it was obliged to send the money to NatWest whether it got it back or not.</ref> SPI then sent the exact same amount to National Westminster Bank USA as well. | |||
Banque Worms refused to return the money and invoked the famous [[discharge-for-value defense]]: it was a creditor with a right to the payment from Spedley. | |||
SPI argued that it was entitled to a return of the payment under restitutionary principles unless Banque Worms had relied on the payment to its detriment, and it hadn’t. The New York Court of Appeals considered that section 14 of the ''Restatement of the Law of Restitution''’s description of the discharge-for-value defense as applying in the case. That provides: | |||
{{quote|{{Restatement of Restitution Section 14}}}} | |||
{{sa}} | {{sa}} | ||
*[[discharge-for-value defense]] | *[[discharge-for-value defense]] | ||
*[[Revolving credit facility]] | *[[Revolving credit facility]] | ||