What is the new Cheque bounce law in UAE

Bounced Cheque and its Legal Consequences in the UAE

The most widely utilized negotiable instrument for security in business and personal transactions, cheques are commonly used by both regular people and businessmen. The UAE government considers a bounced cheques as a serious offense that would subject the defaulters to criminal and civil measures, given the use of checks in both personal and business transactions. :

Under new law, punishment for a bounced cheque is no longer included in the Penal Code, being moved to Commercial Transaction Law. Identifying the importance of cheque bounces, If a cheque fails to fulfill its intended purpose, the issuer will be subject to criminal punishment. This provides the beneficiary with the ability to civilly claim the value of the cheque.

With a few notable exceptions, most occurrences of cheque bounces are in decriminalization as of as of March, 20 2023. But still, 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. With reference to Cheque bounce deemed less criminal through new UAE law.

Reasons of Cheque Bounces

In the United Arab Emirates, cheques are frequently used for both personal and business transactions. They are, in actuality, the most widely used method of rent payment in Dubai as well as the current dated and post dated cheques in business payments. They are always acceptable, but there is a risk of cheque bounce.

You can be subject to civil and/or criminal action if the cheque you write bounces, or returned for any reason.

A cheque is returned due to four factors:

• Insufficient funds in your bank account on the day of issuance of cheque.
• Technical errors include things like mismatched signatures, missing or erroneous dates, overwritten or scratched writing, and mismatch of amount written in numbers and words.
• Closing the bank account before the given check is cashed.
• The bank was instructed by the drawer not to cash the cheque.

What Happens in the UAE When a Cheque Bounces?

In the UAE, a payee who gets a faulty cheque has the right to take legal action against the drawer. They can now immediately petition the court’s execution judge for help. The existing procedure for filing police complaints has been modified to expedite the process. Because most instances are now decriminalized, police intervention is no longer required.

in addition, according to the most recent amendment, the penalty for a bounced cheque in the UAE is based on the amount owed

How to avoid cheque bouncing

Simply, you need to change your proposing strategies for eliminating any risk to subsequent cheque payments, such as notarized contracts and increasing the size of the initial installment or downpayment amount.

• Cheques have been used as payment guarantees; therefore, businesses need to adopt a new approach to guarantee their commitments and watch their bank account for maintaining enough funds.
• For precise cheque writing, use a cheque printing machine and cheque printing software.

Cheque Printing software

To prevent cheque from bouncing, the ideal option would be to use cheque printing software. Since it eliminates cheque writer errors, one of the main causes of cheques that bounce. Because an accurate print of your cheque is produced by a cheque printing machine using cheque printing software.

Another way to prevent check fraud and bounces is to use check printing software. where all textual errors, overwriting, and cancellations can be prevented by the sender. Print checks are used for account payees. After then, the funds are sent to the recipient's bank account.

Cheque printing machines facilitate more efficient financial processes for businesses. They offer the following benefits:

• Professional impression.
• Converts amount numbers to words automatically - no more mistakes.
• Detailed reports of printed cheques.
• Up-coming PDC reminders before cheque date.
• All UAE banks are Pre-defined in the software.

Conclusion

Cheque bounce are common in the UAE. Furthermore, a variety of events, such as wrongful dismissal, company bankruptcy, the disappearance of the cheque issuer, and more, may occur. The most practical course of action for all parties is to settle the dispute amicably at the police station when the bearer of a bounced cheque files a police complaint.

A computer program that lets you print and handle cheques is known as cheque printing system. In order to help prevent cheque from bouncing, the cheque printing program allows printed statements and correctly prints cheques and reports with all necessary information, including the payee's name, amount, date, and account payee.

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Disclaimer: The details of UAE rules is shared here for your information purpose only. UAE government may change the rules and regulation at any point of time, please do your own research on any legal matters.