An outsider authorized by the board signed a company's check, what's their liability if it bounces?

Hello,

According to Federal Law No. (50) of 2022, the signatory on the cheque, even if they are not an employee of the company but are authorized by the board of directors to sign, is jointly liable with the company's account holder for ensuring that the cheque amount is honored on its due date.

This means that both the company and the authorized signatory are legally responsible for the payment of the cheque.

Therefore, if the cheque is dishonored, the signatory may be held liable along with the company for any legal consequences or liabilities arising from the dishonor of the cheque.

Dear Questioner,

Thank you for reaching out with your inquiry regarding the legal liability of an authorized signatory for a dishonored cheque issued by a company.

In situations where an individual is authorized by the board of directors to sign cheques on behalf of a company, it's essential to understand that this authorization entails legal responsibilities.

Even if the signatory is not an employee of the company, their role as an authorized signatory binds them to certain legal obligations.

The liability of the authorized signatory for a dishonored cheque typically depends on various factors, including the specific circumstances surrounding the issuance of the cheque, the applicable laws and regulations, and any contractual agreements in place.

While I would need more details to provide a precise assessment of the situation, generally speaking, if a cheque issued by a company is dishonored, the authorized signatory may be held liable under the relevant laws governing negotiable instruments, such as the UAE Commercial Transactions Law.

It's crucial for the signatory to ensure that they have the necessary authority to sign cheques on behalf of the company and to exercise due diligence in overseeing the company's financial affairs.

Failure to fulfill these obligations could potentially result in legal consequences, including civil liability and potential criminal charges.

To provide you with comprehensive legal advice tailored to your specific circumstances, I recommend scheduling a consultation to discuss the details of the situation further.

During our consultation, we can explore the specifics of your case in more depth and determine the best course of action to address any legal concerns you may have.

Please feel free to reach out to me via WhatsApp or phone to schedule a consultation or if you have any additional questions.

I'm here to assist you with your legal needs and provide the guidance necessary for a satisfactory resolution.

Dear Questioner,

Liability will fall on both parties to the extent of each party's liability in accordance with the law.

You can verify the powers of the authorized signatory, the shares of the board of directors in the company, and if they are partners or authorized under the articles of association or shareholder’s resolution.

You can inform us about your concerns and we can help you to understand your legal situation.

Kindly contact us via WhatsApp for assistance.

What is the reason for issuing the check?

Dear Questioner,

If an authorized person to sign a check signs the check according to the authorization, he is not responsible because he is considered to have acted within the limits of his authorization, and his action goes to the company on whose behalf he signed.

For further inquiries about your topic, you can reach our office or contact us via WhatsApp or email.

Dear,

Legal responsibility falls on the person authorized to sign on behalf of the company, and civil liability also falls on the company that holds the bank account.

If anything else is required, don’t hesitate to contact us via email or call our offices in Dubai or Sharjah.

Jasim Al Haddad Law Firm

Legal Counsel and Consultations

Dear Questioner,

The signer of the check and the owners of the company will be asked about the issued check, because the check is a debt instrument that must be paid.

So, everyone who signed the check, whether in person or in their capacity, and the owners of the company will be asked.