Legal Perspective: Taking partial payment in cases of bounced cheques

The number of cases of cheques 'bouncing' or being returned is increasing and this is defeating the concept of utilising and using cheques to promote trade and commercial business in the community.

Last week, a senior officer of the Dubai Police Depart-ment said, in a press release, that the amount of returned cheques in Dubai last year reached Dh900 million and the number of court cases related to returned cheques was almost 14,092. These figures are alarming and hard work is required to resolve this problem.

Dishonouring a cheque is a crime under the criminal code in the UAE because everybody should make sure that there is enough money in his or her account before signing a cheque. It is important to note that the Central Bank and all competent authorities in this country are working very hard against this illegal attitude.

The law provides for partial payment of cheques. We believe that this provision, if used properly, could definitely reduce the number of returned cheques to a great extent.

The law specifies that partial payment of a cheque is allowed only at the payee's request after he has been informed by the bank that there are insufficient funds in the account of the issuer of the cheque (drawer).

So the decision is normally taken by the payee after learning that there is not enough money to cover the cheque amount. The reasons for the insufficiency of funds in the account are irrelevant.

What is very important here is the fact that the payee accepts to take whatever amount is available at the time of presenting the cheque.

The payee must give his consent to the bank in writing. Thereafter the drawee bank should endorse the amount paid on the back of the cheque and keep the cheque. Also the bank must give the payee a certificate showing the remaining balance due to the payee from the drawer of the cheque.

This certificate is to be used as evidence in case the payee sues the issuer of the cheque for the balance amount.

Legally speaking, the partial payment of cheque constitutes payment accepted or consented to by the payee and accordingly the payment of the balance amount could only be through a civil suit and due to the consent of the payee to accept partial payment, therefore there is no criminal case whatsoever.

We have noticed that even though the law allows for partial payment, we could say that the business community and people in general are not aware of this practice and they do not benefit from it.

If used by all concerned, partial payment of cheques would minimise the number of returned cheques and this, to a great extent, will help reduce the problem.

The writer is a legal consultant on banking and stock market laws.