Glofinco v Absa Bank Limited t/a United Bank

A branch manager of United Bank, Ms Franca Horne, without actual authority, endorsed and guaranteed a series of post-dated cheques drawn by a customer, Playtime International Holdings (Pty) Ltd, in favour of Glofinco, a business that discounted post-dated cheques. The endorsements were made ostensibly on behalf of the bank, binding it as surety and co-principal debtor. Earlier similar cheques had been honoured. When Playtime later defaulted and Horne had resigned, the bank dishonoured the cheques. Glofinco sued the bank, contending that the bank was estopped from denying Horne’s authority due to her apparent authority as branch manager.

The appeal was dismissed with costs; the bank was not held liable on the guarantees.

The case clarifies the limits of ostensible authority and estoppel in South African banking law, emphasizing that third parties may rely on a branch manager’s apparent authority only in respect of ordinary banking transactions. It draws an important distinction between internal authority limits and the implicit limits arising from the nature of the transaction itself.