Like everywhere else, there are a lot of cheque bounce concerns in the UAE. One of the top law firms in Dubai, Khairallah Advocates & Legal Consultants, has years of experience handling several criminal cases involving failed checks. The legislation governing the punishment of people for issuing bounced checks is extremely clear on the point that one will be sentenced to detention or to a fine, if he or she draws a check in bad faith and without sufficient funds, as was indicated in our other blog article linked to failed cheques.

In practice, this means that at the time of writing the cheque the drawee, namely the person writing the cheque either knew he is not able to honour it and/or was reckless to this effect. This means that you either knew, at the time of writing the cheque, that you did not have sufficient funds, or that you ought to have known you will not be able to honour the cheque. In practice however, the Court appears not to be concerned with the circumstances in which the cheque was signed.

Cheque bounce penalty issues

I am adamant that there is a serious flaw with this reasoning because unless you have the ability to see the future, there is no way in which you can predict whether or not you can pay your rent in 9 months time.

With the lack of other employment rights surrounding dismissal and redundancy there are inadequate ways of predicting whether or not your employer will decide to dismiss you or not within the next month. As such, in these circumstances, I am struggling to find “bad faith”.

There have been a large number of media attentions surrounding this matter and the reoccurring theme appears to be that people are being held responsible for crimes which have been committed for reasons sometimes beyond their control.

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Penalizing the non-criminals

In practice, honest, ordinary people sign cheques for their everyday living. This includes for the borrowing, purchasing, conducting business and even paying their rents.

Put yourself in this situation; you decide to rent an apartment and as you do not have all the funds to pay everything in one go, you decide to pay with four, post dated cheques. After signing the contract and handing over the cheques to your landlord, your employer decides to make you and/or a fellow of your colleagues redundant. Unless your landlord is kind enough to cancel the tenancy agreement and hand over the cheques, you risk facing time in jail. Why? Because you lost your job.

This is a rather crude example, but in reality honest individuals are sentenced to jail because they have been dismissed from their employment or the financial situation has hit their business so bad they are unable honour their loans.

You can contact law firms in Abu Dhabi to assist you in taking legal advice in various cases.

A modest proposal for a cheque bounce

I do not think that there the problem lies within in the law which for penalizing bounced cheques, indeed there is no need to neutralize the crime of deceit and fraud. On the other hand, I do not see why a new system of payment should not be introduced. Firstly, I think it should be discouraged to pay with post dated cheques. In relation to this point, I sincerely think that part of the blame should be handed down to those financial institutions that ask customers to provide post dated cheques in which they know, or ought to know, are not able to provide sufficient funds for.

The simple fact of the matter is; it is absolutely worthless to force customers to pay for something in which they are unable to pay for. The best solution I think is, to introduce payment on monthly basis through bank transfers and do credit checks on customers to see if they really are credit worthy, because criminalizing individuals for lack of funds will not magically make funds reappear.

Therefore, the problem is not criminalizing bounced cheques. It is the encouragement of issuing cheques that allows this type of situation to happen and that is where a resolution needs to be made.

Do you agree with the observation & the modest proposal put forward, please comment here to let us know your opinion.

You can use a business lawyer in Dubai to check all your cases.

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FAQ about cheque bounce in the UAE

1-What is the punishment of cheque bounce in UAE?

It should be mentioned that as of January 2, 2022, it is no longer a crime in the UAE to dishonor a check because there are not enough funds in the payor’s bank account. The check’s payee may, however, bring an action for execution against the payor.

2-What is the time limit for cheque bounce case UAE?

The deadline for bringing a complaint is six months after the date the UAE check bounced. Once the application is ready for execution, you must pay AED 150 as the application fee and 5% of the value of the bounced check.

3-Can I go to jail for cheque bounce?

If the drawer is found guilty of willful default, he faces a two-year prison sentence, a fine equal to twice the amount of the check, or both. Additionally, the defaulter has a month from the date of the lower court’s verdict to file an appeal with the sessions court.

Please feel free to contact us if you are facing any penalty for bounced cheque related issues.

Khairallah Advocates & Legal Consultants With years of experience in handling all legal related issues, our highly skilled attorneys are always here to help you out.

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