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A bank cheque is one of the country’s most regular forms of payment. This is one of the main reasons why cheques bounce in the UAE. A bounced cheque, often known as a dishonored or bad cheque, may have legal ramifications. Let’s check Cheque bounce law in UAE.
With a few notable exceptions, most occurrences of cheque bounces are in decriminalization as of January 2, 2022. On the other hand, a bounced cheque is still regarded as an act deserving of financial punishment in the UAE. Also, the offending person is responsible for civil claims.
Cheque Bounces
Cheques are commonly in use in the UAE for both corporate and personal transactions. In fact, they are the most general form of rent payment in Dubai. While their acceptability is never a problem, they do carry a risk.
When a cheque you issue bounces, is in return, or gets a dishonour, you may face civil and/or penal action.
A cheque is in return due to four factors:
- Non-availability of money equal to or greater than the amount of the cheque on the day of issuing.
- Mismatched signatures, missing or incorrect dates, and over-written or scrawled text are examples of technical faults.
- Closure of the bank account prior to the encashment of the issued cheque(s).
- Request that the bank withholds payment on the cheque.
- The drawer issued an order asking the bank not to cash the cheque.
- Before the cheque was presented for payment, the drawer’s bank account was closed.
What is the new Cheque bounce law in UAE
In contrast to other countries, the UAE permits persons in possession of dishonoured bank cheques to launch a criminal prosecution against the cheque’s issuer. Article 401 of Federal Law Number 3 of the 1987 Penal Code establishes penalties in the form of a fine of not less than AED 1,000 or imprisonment of not less than one month, depending on the circumstances.
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The bank may request a grace period of no more than three working days if it is unable to send the statement right away. According to Article 618 of the UAE Commercial Transactions Law, the time limit for submitting a cheque is six months from the date of issue.
The cheque may only be in submitition for payment on the date specified on it, in accordance with Article 617 of the Commercial Law. It cannot be presented for payment prior to that day.
How to avoid cheque bouncing
“Strategy for collection of dues and rentals will need to change. It’s better for businesses to consider a different approach to securing payments,” said Abaragh, outlining methods such as notarized contracts and raising the size of the initial installment to eliminate any risk to subsequent ones.
- Cheques have been utilized as payment guarantees, according to Abaragh, who explained that firms must now take a different strategy to ensure their obligations.
- A chequebook gives you immediate access to monies in your bank account. To avoid chequebook fraud, use it carefully and follow these money-saving suggestions.
- Using cheque printing software along with a cheque printing machine for accurate cheque writer.
Cheque Printing software
A cheque printing software would be the perfect solution to avoid cheque bouncing. As it curbs one of the major reasons for cheque bounce- cheque writer errors. Because a cheque printing software uses a cheque printing machine for printing your cheque accurately.
Using cheque printing software is another technique to avoid cheque fraud and bounces. Where the sender may prevent all textual errors, overwriting, and cancellations. Account payee cheques are print cheques. The money is subsequently in wire to the receiver’s bank account.
Cheque Printing Machines help firms operate their financial operations more effectively. They provide the following advantages:
- Business processes that are proactive and efficient
- Sustainability
- Templates and multi-cheque printing software
- Reporting in detail
- Payee administration
- Simple and simple to use
Conclusion
In the United Arab Emirates, occurrences of bounced cheques are frequent. Moreover, can occur to a number of things, including unlawful termination, corporate bankruptcy, the disappearance of the cheque issuer, and more. In actuality, when the bearer of a bounced cheque files a police complaint, the most feasible alternative for all parties is to resolve the problem calmly at the police station.
A cheque printing software application is a computer program that allows you to print and manage cheques. The cheque printing software enables printed statements and appropriately generates printed cheques and reports with all essential information such as payee name, number, amount, date, payee account, and so on, which aids in the prevention of cheque bouncing.
If you cannot reach a peaceful solution and the issue worsens, contact an expert lawyer as soon as possible. It would be the most practical and sensible alternative to avoid future serious legal ramifications and losses. As an experienced law practice with many years of legal expertise, Khairallah Advocates provides professional assistance in situations involving bounced cheques in the UAE. If you are not based in the UAE, you may supply us with a Power of Attorney that has been notarized in your current country and certified by the UAE Ministry of Foreign Affairs and International Cooperation.