A bank cheque is one of the most prevalent forms of payment in the United Arab Emirates. One of the main reasons why bounced checks are so common in the UAE is because of this. A bounced cheque, also known as a dishonored or bad check, can result in legal action against the issuer, both civil and criminal. If you ever find yourself in a bind because a check you issued or received has been returned by the bank, here's what you should do. So without any further ado, let’s learn!
Article 401 of the UAE Federal Penal Code of 1987 governs the case of bounced Cheque in the UAE. According to the law:
Cheques are commonly used in the UAE for both corporate and personal transactions. They are, in fact, the most often accepted means of rent payment in Dubai. While their acceptability is never a problem, they do have the potential to go bad.
When a check you issued bounces, is returned, or is dishonored, you may face civil and/or penal action. Now the question is when does a cheque in the UAE bounce or become a bad check?
Four Reasons for a Cheque being returned:
According to a prior change to the rule on dishonored cheques, the drawer (person who draws the cheque) can be fined a minimum of AED 1,000 and sentenced to at least one month in prison in the UAE, depending on the amount of the cheque.
The One-Day Courts in Abu Dhabi, Ras Al Khaimah, and Dubai handle legal actions involving rejected Cheque. These courts resolve cases quickly, usually within 24 hours, ensuring a smooth and efficient process.
Bounced Cheque are still regarded a criminal offence in the UAE, despite the fact that jail is usually the last resort. This is one of the reasons why, regardless of which city of United Arab Emirates you are in, you're in, and reporting a bad check to the police should be your first step.
The procedure may be similar to that used in Dubai; however the fine amount and certain legal repercussions for bounced Cheque in Sharjah and other cities of United Arab Emirates may differ.
Cheques are used to make the majority of payments in the UAE. Despite the fact that the Direct Debit System has been developed, some people still write Cheque, and several banks require post-dated Cheque as security when accepting a personal loan.
The fees for bouncing a check in the UAE and Dubai are not the same. Cheque bounce cases will no longer be dealt with the criminal court in Dubai, according to a new law passed in 2017. It will be settled by the fines themselves, i.e. there will be no jail time for the issuer of a dishonored cheque, which is a huge relief for check payers. This new law only applies in Dubai. The rest of the UAE will follow customary law, which includes detention and fine payment.
If the value of the check exceeds AED 200,000, the penalty will be determined by the relevant authorities. The fine will be directed at the government, not the recipient.
The bank is required to pay half of the sum and bounce the rest, according to a recent change to the law. The beneficiary can go to court and get the balance of the money if the check bounces.
The UAE Cabinet has approved changes to the Commercial Transaction Law relating to the legal consequences and penalties of a failed check. The new rule on bounced Cheque in the UAE, which is set to take effect in 2022, will:
To avoid fees and other complications associated with a bounced check, the payer must:
Thus we can conclude with the fact that Cheque return or bounce is a situation which should be avoided to rescind yourself with its related consequences that can become a problem for you. We this blog provided you with incite full information. The above mentioned article is carefully devised by our Experts to provide you assistance. For more related information on other related aspects, feel free to check out our Website as well.
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Yes, a foreign entity can open business account in the UAE. The registration of any organisation in the UAE is generally an easier and cost-effective way.
The requirement for opening any bank account in the UAE vary from one bank to another. Although, the existence of a major director or shareholder is generally required.
A limited company should have a dedicated bank account because they have a separate legal entity.
The benefits of having business account includes tracking of the expenses, easy calculation of the tax liabilities as well as management of cash flow.
Yes you can open a business account in various major currencies of the world other than the UAE dirhams.
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