United Arab Emirates: Tackling Post Dated Cheques In Bahrain

Last Updated: 5 October 2017
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, August 2018

Can an instrument of payment be offered that ensures complete safety? The reality of the latter statement is an unlikely one. The law, however, does attempt to provide security where a payment transaction fails to do so. The nooks and crevices of such law must be understood to avoid any misguided reliance's on it.

Post-dated cheques are considered to be an instrument of security to guarantee future payments. They, however, are also used as a tool of secured future payment. As can be understood, a post-dated cheque promises payment of a specific amount at a future date, and the party can only cash the said amount on the future date. In Bahrain, there are criminal implications for issuing a post-dated cheque from an account with insufficient funds. The Criminal Court of Appeal in Bahrain has issued several judgments clarifying the risks associated when doing so.

Law-Binding Spell

Due to both the social and legal implications of the 'bouncing' of a post-dated cheque, beneficiaries find it favorable to rely on this type of payment transaction. Of course, one cannot automatically assume a criminal offense will arise upon the dishonoring of a cheque, but rather one can rely on court judgments for protection as the likelihood of criminal implication is high.

The Bahraini Criminal Court of Appeal has elucidated as to the matter of intention as seen below:

I. Criminal Appeal Number 5 of 2005, in session dated 17 October 2005 found that regardless of whether the cheque was issued as a security measure only, it remains a transaction of certainty that the issuer must adhere to.

II. Criminal Appeal Number 77 of 2006, in session dated 26 July 2006 states that assuming the cheque issuance follows the legalities of doing so, the crime of issuing a bounced post-dated cheque occurs even if the issuer is aware of the insufficient funds in their account and issues the cheque as a security method only.

Denoting that the issuer of a post-dated cheque automatically assumes a risk and an intention to provide the money promised in the cheque regardless of whether that was their real intention.

I. Criminal Appeal Number 5 of 2005, in session dated 17 October 2005 states if the account of the issuer does not contain sufficient funds the crime is considered to be committed regardless of the reasoning behind it.

II. Criminal Appeal Number 77 of 2005, in session dated 26 July 2006 follows that an issuer of a cheque automatically assumes 'bad intention' by merely knowingly or unknowingly issuing a cheque to an account with insufficient funds.

The decisions highlighted above follow a similar pattern of automatic risk of criminal liability regardless of intention or awareness of the crime being committed. It is enough to perform the action of issuing a post-dated cheque that will not be fulfilled at a future date to acquire liability.

The Criminal Court of Appeal has also shed light on which instances do not qualify an issuer of a post-dated cheque safety from liability:

I. Criminal Appeal Number. 59 of 2005, in session dated 15 May 2010 elucidates that a crime is still committed where there are insufficient funds in the account when the beneficiary attempts to cash the post-dated cheque even if the issuer provides the beneficiary with cash of the amount prescribed in the post-dated cheque before they cash the cheque.

II. Criminal Appeal Number 77 of 2006, in session dated 26 July 2006 follows the above line of reasoning stating that if the issuer does not take back the post-dated cheque after providing the beneficiary with the prescribed amount, then they are still liable for the crime if the beneficiary attempts to cash the post-dated cheque.

As such, these judgments provide that a defendant cannot escape liability by giving the beneficiary the amount prescribed within the cheque before the promise date. To do so, they must return the post-dated cheque to avoid liability. Otherwise, the issuer takes the risk in procuring liability regardless of the fact they had fulfilled their promise in a different manner.

I. Criminal Appeal Number 59 of 2005, in session dated 15 May 2010 states that even if the date of the post-dated cheque has passed and the beneficiary raises a claim to the police after the said date, the crime will still have been committed and the issuer liable.

II. Criminal Appeal Number 93 of 2005, in session dated 03 July 2006 lists that an account with no funds, insufficient funds, or a frozen account that does possess sufficient funds are all types of accounts that result in the crime of a 'bounced' cheque.

Deduction of the above follows that the law offers a wider scope of protection to a beneficiary of a post-dated cheque than it does for the issuer of one. As such although a beneficiary cannot be ensured complete safety it is fair to say that they are guaranteed sufficient safety.

The Bahraini Court of Appeal has also issued stricter judgments in comparison to those of the UAE, such as:

Criminal Appeal Number 59 of 2005, in session dated 15 May 2010 and Criminal Appeal Number 9 of 2006, in session dated 25 December 2006 both make clear that the law does not automatically repeal liability if the issuer of the cheque pays the promised funds to the beneficiary after the claim has been raised.

Unlike UAE law, the waiver of the criminal complaint is not offered by Bahraini law. A claimant must choose to waive their right to the criminal complaint once payment of indebted amount occurs. If they (or; their appointed lawyers) do not decide to do so, then the right to continue the criminal complaint remains within the bounds of the law. The action of issuing a post-dated cheque with the use of an account that contains insufficient funds remains an active crime.

Once a judgment has been issued, Article 393 of the Penal Code (Decree Number 15 of 1973) mandates a fine or a prison sentence on the accused. Social stigma and punishment are also followed as per the Law of Commerce (Decree Number 7 of 1987) in Article 491, where it states that once bad faith and crime is found, the court will order the publication of the judgments summary in one of the local newspapers. The publication will include their name, occupation, and the punishment they will endure.

Conclusion

What can be construed from the above judgments is the reach of the Bahraini law and its intent to implicate those who issue post-dated cheques with cash consideration. Although payment transactions are tricky, the ability to prove bad faith and ill-intention require the mere existence of an account with insufficient funds and the rest of the dominoes follow.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions