Understanding Cheque Laws in the United Arab Emirates
Cheques are one of the primary payment methods utilized in the United Arab Emirates, in lieu of cash. They represent an effective payment medium and typically cannot be returned, even if the account holder raises objections. The issuance and processing of cheques in the UAE are regulated by the Commercial Transactions Act No. 18 of 1993.
The return of cheques is a common issue faced by residents of the UAE. These cheques are governed by the stipulations outlined in the Commercial Transactions Act.
Under UAE law, it is prohibited to issue unpaid cheques or to have insufficient funds in your account to cover the cheque’s value. Such actions carry legal consequences. Familiarizing yourself with the validity period of cheques in the UAE is essential to ensure timely encashment before they expire.
Cheque Validity and Expiry
In the UAE, cheques are valid from the date of issuance.
If presented to the bank before the cheque’s date, it will be rejected.
The expiry period for a cheque is six months from the date written on it. Beneficiaries must present cheques to the bank within six months to claim their value.
However, some individuals delay submission for more than six months, either due to lack of awareness or excessive trust in the drawer. As a result, they may lose the right to claim the cheque’s amount through banking channels.
Legal Options for Expired Cheques
Even after the six-month banking deadline, the payee still retains the right to initiate a commercial case against the drawer in accordance with the UAE Commercial Transactions Act.
This legal action applies to both natural and legal persons. The drawer may be subjected to travel restrictions until a verdict is issued regarding the cheque amount and the penalty is enforced.
Failure to comply with the court's ruling may result in imprisonment, for a duration determined by the court.
The Importance of Legal Support
Given the potential legal and financial risks involved, engaging an experienced lawyer is a prudent decision. Legal guidance can help prevent damages, ensure compliance, and protect your rights in any cheque-related disputes.
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