With an increase in cases of cheques bouncing after the onset of the global recession, one needs to be careful while writing and issuing these instruments, lawyers have said.
Cheques issued as security for some future payment are covered by the commercial law of the country and complaints of such cheques not being honoured are heard by the civil courts.
The hearings in such cases go on for a long time and there are no provisions for immediate punishment if such cheques bounce.
But cheques issued to make an immediate payment are covered by the criminal code and if they bounce the issuer can face an immediate jail term ranging from 24 hours to three years, said lawyer Walid Abu Nida.
The cases are referred to the criminal court and the prison term can depend on the severity of the offence and the amount involved.
According to Abu Nida, it is mostly such cases that are coming to the courts and people are being convicted. But he said the increase in the number of such cases and the rate of conviction were not alarming at all.
However, in case a cheque has been issued as security for some future payment, the issuer must have a written agreement to the effect with the beneficiary, or it would be difficult to differentiate between a cheque issued as a guarantee and one issued to fulfill an immediate financial commitment, said Abu Nida.
“A written agreement can make all the difference, so one must have it,” cautioned the lawyer.
According to another lawyer, who did not want to be identified, most cases of cheques bouncing involve those issued to fulfill financial obligations or make payments, and they are immediately reported to the authorities concerned.
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