Barclays Bank plc v Quincecare Ltd [1992] 4 All ER 363. High Court, Queen’s Bench Division (Commercial Court), Steyn J. Judgment delivered on 24 February 1988; reported in 1992.
The case gave its name to the “Quincecare duty”: a bank may need to investigate a payment instruction given by someone acting for its customer where there are reasonable grounds to suspect that the instruction misappropriates the customer’s money. Barclays was not found to have breached that duty on the facts.
Facts
Barclays agreed to lend money to Quincecare Ltd to purchase four chemist shops. The company’s chairman, Harry Stiller, instructed the bank to transfer funds drawn under the loan to a firm of solicitors. He had separately instructed the solicitors to receive the money on his behalf and send it to an account in the United States. Through those arrangements, Stiller misappropriated the funds.
Law Teacher writing support
Writing a law essay?
We choose a writer who is an expert in your area of law and qualified to at least the academic level you select. Most of our writers hold a master’s degree or PhD, have teaching experience, or both.
Send us your question and, if you wish, any marking criteria. We’ll write an essay to your instructions.
The bank sued Quincecare and the company which had guaranteed the loan for repayment. The defendants argued that Barclays had paid out the money in breach of its mandate or its duty of care to Quincecare.
The payment instruction and the duty to inquire
Quincecare’s banking mandate permitted orders signed by two directors or by the chairman. Stiller had supplied a signed written instruction, and Steyn J found that it complied with the mandate. The remaining question was whether the bank nevertheless had grounds to investigate before making the payment.
Steyn J explained that the bank’s duty to exercise reasonable care had to be considered alongside its obligation to execute proper payment orders promptly. Liability was not confined to a bank knowingly assisting dishonesty. A bank should also refrain from executing an instruction while it had reasonable grounds, although not necessarily proof, to believe that it was an attempt to misappropriate the company’s funds.
Decision
There was nothing in the history of the transaction that should have put Barclays on inquiry about Stiller’s honesty. The duty to refrain from making the payment therefore did not arise on these facts. The case is an authority for the circumstances requiring inquiry, rather than an example of a bank being held liable for failing to inquire.
Significance and later clarification
The distinction between a customer and someone acting for that customer is important. Stiller’s instruction purported to be the company’s instruction, but his dishonest purpose was his own. The inquiry concerns the representative’s authority to use the customer’s money, rather than whether the bank considers a proposed payment commercially sensible.
In Philipp v Barclays Bank UK PLC [2023] UKSC 25, the Supreme Court revisited Quincecare and explained the principle through agency law. A bank put on inquiry must check the agent’s authority; there is no conflict with the duty to execute a genuinely authorised instruction promptly. The Court rejected extending that reasoning to an unequivocal payment instruction given personally by a customer who had been deceived by a third party.
Quincecare should therefore not be read as establishing a general duty to refuse every payment that a bank suspects may expose its customer to fraud.
Sources and related authorities
The Supreme Court’s judgment in Philipp recounts Quincecare’s facts and decision at paragraphs 43–47 and explains its legal basis at paragraphs 90–100. It identifies the earlier authorities as Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] 1 WLR 1555, Karak Rubber Co Ltd v Burden (No 2) [1972] 1 WLR 602, and the first-instance decision in Lipkin Gorman v Karpnale Ltd [1987] 1 WLR 987.
