Bounced check rules in UAE
- calendar_month 2023/Jul/30
- comment No Comment
- person مولودزاده
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Bounced check rules in UAE
Most financial transactions in the UAE are done through bank checks. This has made it easier to do many business transactions in this Arab country of the Persian Gulf. Although checks help a lot in the development of businesses, sometimes bounced checks bring problems for such businesses.
The Central Bank of the UAE has announced reforms to solve this problem. According to the laws of this country, a bounced check is also known as an overdraft check, and legally, the wrongdoer can be prosecuted by the competent authorities.
Rules related to bounced checks
According to UAE laws, if a check is bounced, it is considered a crime and the person will be punished with imprisonment and fine or both.
A bounced check has become very popular in the United Arab Emirates due to the increase in the volume of trade in recent years. A bounced check is most likely related to business transactions, bank loans, rental issues, and many other issues. Therefore, to prevent the increase of such illegal violations, the central government has considered serious consequences for the violator.
According to Federal Law No. 18 of 1993, the person issuing the check has accepted all the rules of Article 483. A check is considered as a commercial document and the issuer of the check is required to pay the amount written on it. If the check amount is not collected on the date recorded in the check, the owner of the check should accept the legal consequences.
Consequences of bounced check
If the issued check is bounced for any reason and the issuer is unable to repay the debt within the stipulated time, this means that the owner of the check has violated Article 632 of the Commercial Transactions Law, and the recipient must refer to the owner of the check and prove his objection.
Check refund period
The person issuing the check must meet all the legitimate conditions of the check according to Article 598 and all check sheets must be issued and paid in the United Arab Emirates. According to Law 632, the recipient of the check must give six months to the issuer of the check to pay the amount. Also, the receiver must file a lawsuit and file a criminal and civil lawsuit against the issuer of the check within two years after the last date written on the check.
Reasons for dishonoring a check in the UAE
In general, the check is bounced for several main reasons:
- Lack of access to the amount written on the check
- Signature mismatch
- Not having a specific date
- Excessive entries on the check sheet
- Closing the bank account before issuing the check
- Receiving a message from the check issuer to the bank that the check has not been cashed
What happens after the check is bounced?
The check holder can take legal action against the check issuer. At present, reforms have been made regarding the check laws in this country and it has greatly reduced its long judicial process.
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