In a leading case, the Court examined the extent of the duty of care that a bank owes to its customers when executing their orders.

By Andrea Monks and Nell Perks

On 30 October 2019, the UK Supreme Court dismissed Daiwa’s appeal in the case of Singularis Holdings Ltd (In Official Liquidation) v Daiwa Capital Markets Europe Limited [2019] UKSC 50. The decision marks the first successful claim for breach of the Quincecare duty that banks owe to their customers. Latham & Watkins expects to see further examination of the duty as instances of fraud continue to rise and the courts consider the degree of responsibility that banks should bear for stopping financial crime.

The Quincecare duty, which Justice Steyn set out in 1992, refers to an implied term of the contract between a bank and its customer that the bank will use reasonable skill and care in and about executing the customer’s orders. A bank will be in breach of this duty if it executes an order that it knows to be dishonestly given, shuts its eyes to the obvious fact of the dishonesty, or acts recklessly in failing to make reasonable enquiries.