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would be that his loan became a bad debt in which case at the very worst the bank would be in the identical position as if he had paid his call and made no further payment. was not possible for the bank to suffer any loss by reason of
that bad debt.
It
On the other hand so long as it was a good debt the bank had a very real advantage in the possession of money on immediate demand, instead of available only by extreme formalities.
-
When it came to the question of book-keeping; these items (again here I had a discretion) it was not a question of
"sould these items be left out or should I put in items that ought not to be there, it was a question of my having to put in the books these items in some method or another.
It
It is possible to look at these transactions in two ways. is possible to say that because no actual coin of the realm changed hands that therefore there had been no such transaction- that that ought not to have been in the books. Un the other hand, it isequally possible to say that these were cash transactions, that the money was in fact handed over for one purpose and was in fact handed back for another. my test question "What is the intention of the Parties".
I applied it became clear.
Then It was obviously the intention of the share- holder, to pay for his share in full. the intention of the bank to lend cash recoverable on demand, It was equally obvious recoverable as a loan, the intention of the parties was clear. That being so I instructed that these items be entered as cash items and having made the decision it became quite clear to me that I had acted correctly. Because, as did occur, did we at my time wish to bring an action to recover these loans, and did our books or our statutory report or any official documents filed by us, did these documents declare that no money had in effect been given, that these were not cash
transactions, had that been done, then it would have been a good defence to any action so to recover the money. The bank would have been estopped from maintaining that we had ever made the loan if our books and documents had not declared the fact that they were made.
There was a balance sheet issued, and filed by me. Prior to the printing of this balance sheet there was an earlier balance sheet got up, it is NIB 8. That is signed by me, and my
co-directors. To the best of my knowledge at the time it was a perfectly accurate balance sheet. I have since become satisfied that there are errors in that balance sheet which are entirely due to branch items having been included, where in fact they cancelled one another and should not have been
included.
That balance sheet was prepared by the auditor of the company at my request, my having stated my ignorance of the method of drawing up a balance sheet for public requirements. balance sheet was made up from three, what I may call branch
The balance sheets. They are three balance sheets entirely agreeing with the books of the firm, and to my mind entirely accurate, and having no errors whatever in them. From these original balance sheets given by me to the auditor, a typewritten balance sheet was produced i.e., NIB 8. That balance sheet I checked and signed as did my co-directors. This is the only balance sheet that I myself have signed or my directors.
There are two errors in this balance sheet. These two errors as I say, are due to the auditor having left in branch items which in fact cancelled one another and should have been omitted. But they are neither errors that a reasonable man
exercising ordinary care would have noticed in the balance sheet.
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