Consequences of bounced cheques

Dear Sir/Madam

Thank you for your question. The issue of bounced cheques is covered under article 401 of Law No. 25 of 2005 amending the provisions of the UAE Penal Code which reads:

"A person shall be punished by detention or the fine if he gives in bad faith an instrument (a cheque) without sufficient existing consideration that can be withdrawn or recovers, upon giving the cheque, all or any of the consideration so that the balance amount cannot cover the value of the cheque or the drawee orders not to pay the cheque or has deliberately issued or signed the cheque in a manner preventing its payment.

The same penalty shall apply to any person who endorses or delivers a cheque to bearer to a third party, while he knows that the cheque has no sufficient existing or withdrawable balance.

The penal case shall be extinguished if payment or waiver occurs upon committing the crime and prior to deciding the case by a final judgment. If this occurs after the judgment becomes final, its execution shall be stopped".

Hence, a bounced cheque may result in the beneficiary of the cheque filing a police case at the nearest police station where the cheque has been given. The police station may also refer the complaint to the criminal court in order for the court to issue a verdict against. As mentioned above, the case will be dropped if a settlement of the cheque amount is made.

Regards,

Ahmed Odeh