Narni Pty Ltd v National Australia Bank Ltd

Narni Pty Ltd, the appellant, took legal action against National Australia Bank Ltd, the respondent, seeking compensation for losses incurred due to the bank dishonouring cheques issued by Narni despite the bank regularly exceeding the approved overdraft limit. The dispute was heard in the High Court of Australia. Narni argued that the bank had a duty to honour cheques despite exceeding the approved overdraft limit, given the bank's regular practice of doing so. The central legal issues before the court were whether there was an implied term in the banking contract that cheques should not be dishonoured due to exceeding the approved overdraft limit and whether the bank was liable for compensation for losses of future profits following the failure of Narni's business attributable to the bank dishonouring cheques.

The court held that the bank had a duty to honour cheques, as it had regularly done so, despite the customer exceeding the approved overdraft limit. The court found that an implied term existed in the banking contract that cheques should not be dishonoured on the ground that the debit balance of the account exceeded the approved overdraft limit. Furthermore, the court found the bank liable for compensation for losses of future profits following the failure of Narni's business attributable to the bank dishonouring cheques. The court held that the bank's failure to honour cheques led to the collapse of Narni's business, and the bank was liable for the consequential loss of future profits. The court found that the bank's actions constituted a breach of the implied term and resulted in damages to Narni. The court awarded Narni compensation for the loss of future profits.