Cheque bounce is a never-ending problem in the UAE, and it affects many individuals at some point in their lives. In the UAE, it is considered a criminal offense, with financial and legal aftermath. Bounced cheques can occur in a range of business transactions, such as stock exchanges, bank loans, property leases or purchases, and individual transactions.
Bounced cheque complaints and lawsuits can be caused by many factors, the most common of which is the debtor's failure to pay the obligation to the creditor on the agreed-upon due date. Both criminal and civil proceedings can be brought against an offender under UAE Federal Law No. (3) of 1987, promulgating the Penal Code. As a result, it is critical for anyone working with cheques in the UAE, particularly those who do not want to "intentionally" commit a crime and face the consequences, to understand how to properly issue and accept cheques, as well as how to deal with situations where deposited cheques are returned unpaid.
What is Cheque?
A cheque is intended to act as a payment/negotiable instrument, customarily recognised instead of money. The Federal Law No. (18) Of 1993, issued under the Commercial Transactions Law, regulates the issuing and circulation of cheques in the UAE. Article (483) of the law defines a cheque as "an order issued by a person (the Drawer) to a bank (the Drawee) to pay on the date indicated therein (Date of Issuance), a specific sum of money to the order of a third person (the Payee), being the beneficiary, or the bearer thereof."
What causes a Cheque Bounce?
Cheques are widely used in both business and personal transactions in the United Arab Emirates. They are one of the most common kinds of rent payment and are also used as a method of security in Dubai.
You might face civil and/or legal consequences if a cheque you wrote bounces, is returned, or is dishonoured. When does a cheque bounce or turn into a bad cheque in the United Arab Emirates? A cheque might be returned for any one of the following reasons: