Most money – in its broad economic sense – nowadays exists in the form of incorporeal bank money and most payments of larger sums are generally made through the banking system. Though courts and commentators tend to simply equate transfers of incorporeal bank money with transfers of physical money (coins and banknotes), they operate in fundamentally different ways and produce entirely different legal relations between the parties involved. One cannot ignore those differences without oversimplifying the matter. Notwithstanding the fact, as it will ultimately turn out, that the proprietary consequences of defective transfers of incorporeal bank money are broadly similar to those of defective transfers of physical money, a correct and precise legal analysis still requires strict distinction between them.

This chapter deals with transactions involving incorporeal bank money and considers how the principles, which have been developed in the previous chapters of this book, may be applied in that regard. It is necessary to first set out the mechanisms of how transactions involving incorporeal bank money typically operate (section 1). Apart from that, there are two particular issues which require special attention. On the one hand, the question arises whether and in how far a tracing party, for example the victim of a theft or a breach of trust, may trace into and assume proprietary rights in incorporeal moneys (bank accounts), which stand at the end of the respective tracing chain (section 2). This problem arises whether or not the original asset has also been incorporeal money. On the other hand, the question arises whether and in how far a tracing party may assume proprietary rights in traceable substitutes, which are the product of an unauthorised or an involuntary drawing on that party's bank account. In this case, bank money is the original asset and stands at the beginning of the respective tracing chain (section 3). This problem likewise arises whether the final asset of the tracing chain is incorporeal money or not.

This chapter is only concerned with transactions involving “ordinary” bank money, i.e. transfers of funds from one bank account to another.