A cheque is a payment instrument that stands in for cash — issuing a cheque without sufficient funds is a crime punishable under the Kuwaiti Penal Code to protect trust in commercial transactions.
A cheque is not a credit instrument: a cheque is payable on demand upon presentation — post-dating a cheque is also an offence.
Contents
1) The Concept of a Cheque
- Definition: a written order from the drawer to the drawee (bank) to pay a specified sum to a third party (payee).
- Payment instrument: a cheque is payable on demand upon presentation — unlike a bill of exchange which may be deferred.
- Mandatory particulars: the word "cheque" — date of issue — drawee's name — amount — drawer's signature.
- Negotiability: an order cheque is transferred by endorsement — a bearer cheque by delivery.
2) Elements of the Offence
- Physical element: issuing a cheque that meets the formal requirements, presenting it to the bank, and having it dishonoured for insufficient funds.
- Insufficient funds: the absence of an existing and available balance covering the full value of the cheque.
- Mental element: criminal intent — the drawer's knowledge at the time of issue that there were insufficient funds.
- Bad faith: bad faith is presumed once the cheque is returned — the burden of proving good faith falls on the accused.
Article 237 Penal Code: punishes with imprisonment up to three years and a fine not exceeding KD 3,000 — or either penalty — anyone who in bad faith issues a cheque not backed by sufficient funds.
3) Forms of the Offence
- No funds: issuing a cheque with the drawer's account empty or insufficient.
- Withdrawing funds: withdrawing funds after issuing the cheque and before its presentation.
- Stop-payment order: ordering the bank not to pay the cheque without a legal reason.
- Signature to prevent payment: deliberately signing in a manner different from the specimen on file at the bank.
- Closing the account: closing the account after issuing uncashed cheques.
4) Penalties
Drawer's penalty
- Imprisonment up to three years.
- Fine up to KD 3,000.
- Or either penalty.
- Aggravated for repeat offenders or fraud.
Ancillary penalties
- Ban from issuing cheques for a specified period.
- Order to pay the cheque's value.
- Publication of the judgment at the offender's expense.
- Name entered in the bounced-cheque register.
5) Defences and Exemptions
- Good faith: proving the drawer believed sufficient funds existed at the time of issue.
- Payment: paying the cheque's value before a final judgment may mitigate the penalty.
- Withdrawal: the payee's withdrawal of the complaint does not extinguish the public prosecution — but influences the court's assessment.
- Limitation: the criminal action lapses after the prescribed period.
- Formal defect: if the cheque lacks an essential particular, it may not be considered a legal cheque.
Stop-payment exceptions: a stop-payment order is lawful in cases of loss, theft of the cheque, or bankruptcy of the payee — these are legitimate reasons and do not constitute an offence.
6) Payee Rights
- Recourse against the drawer: claiming the cheque's value and compensation for damage.
- Recourse against endorsers: claiming jointly against everyone who endorsed the cheque.
- Criminal complaint: filing a complaint with the public prosecution for criminal proceedings against the drawer.
- Precautionary attachment: requesting attachment of the drawer's assets to secure the claim.
7) Criminal and Civil Proceedings
Criminal prosecution
- Filing a report with the public prosecution together with the dishonoured cheque.
- The bank's statement that the cheque was returned for insufficient funds.
- Investigation and referral to trial.
- Joining a civil claim in the criminal proceedings.
Civil action
- Filing a claim for the cheque's value and damages.
- Applying for a payment order if the debt is established by the cheque.
- Precautionary attachment of the debtor's assets.
- Compulsory execution after judgment.
Civil party: the payee may join as a civil party in the criminal proceedings — combining criminal prosecution with a compensation claim. See litigation procedures.
8) Practical Guidance
For the drawer
- Ensure sufficient funds before issuing any cheque.
- Do not issue post-dated cheques — that is also an offence.
- Pay immediately if a cheque bounces.
- Consult a lawyer immediately if a report is filed against you.
For the payee
- Verify the cheque's details before accepting it.
- Present it for payment as soon as possible.
- Keep the dishonoured cheque and the bank's statement.
- Report to the prosecution immediately and file a civil claim.
Facing a bounced-cheque case — whether as drawer or payee? Contact Attorney Meshari Obaid Al-Enezi — Yumnaak Law Firm.
