UAE Imposes Up to Dh5,000 Fines and 2 Years Jail for Cheque Misuse
A check will only be legally valid in the UAE if it contains certain key elements set out under Article 627 of Federal Decree-Law No. 50 of 2022 regulating commercial transactions. The essential elements are essential to the check for it to be regarded as a legally valid instrument and to enforce its payment.
The check under the law must contain the following: The word "cheque" shall be written in the language in which the instrument is framed; an unconditional order to pay a sum of money; the name of the drawee—the party on whom the cheque is drawn; the payee—means the person in whose favor the cheque is drawn or to whose order the payment is directed; the place at which the payment is to be made; the date and place of issue of the cheque; and the signature of the drawer—the person who executes the cheque.
Failure to meet all these conditions normally leads to strict legal consequences; for instance, on any intentional incorrect signing of a check, the negligent party may be imprisoned or fined. The punishments for these are furnished under Article 675 of the UAE Commercial Transaction Law. Such a person found guilty of deliberately miswriting a check can be imprisoned for a period of six months to two years in minimum and maximum sentences. Other than that, the criminal may be obliged to pay a fine not less than 10 percent of the check value but not less than AED 5,000 with a maximum sentence that can be double the check amount. It also includes other cheque-related frauds, such as instructing the bank to dishonor a check prior to the due date, closing the account, drawing out the entire balance before presenting the check, or deliberately allowing one's account to freeze. All these come under the same legal framework for punishment.
Moreover, when a check is returned or dishonored against a faulty signature, if that is done with malafide intent, under the UAE Crimes and Penalties Law, such a drawer may also be held criminally liable. Article 453 of Federal Law by Decree No. 31 of 2021 prescribes that a person found in breach of trust who misuses, embezzles, or appropriates funds, securities in writings, or any other movable property shall be penalized. This law refers to the fact that a person is found in a situation whereby he intentionally puts an incorrect signature, which results in a particular check being dishonored. This, by many means, is considered a defraud case, and hence an imprisonment or fine will be granted. The article is applied in that the person in possession of the check or instrument shall act with bad faith and cause harm to the rightful owner.
It also opens the avenue for a payee to take legal action against the drawer in cases where the check is dishonored because of an incorrect signature. A payee can initially write to the drawer with a request to reissue the check with a correct signature, precisely as the signature on file with the bank, if the wrong signature was given unconsciously. However, if, in the case of malice or fraudulent intent, the wrong signature has been done, the payee can claim the right to take the case to court. He might even file a civil or criminal lawsuit against the drawer for recovery of the owed amount. A case can be taken to the appropriate court in the UAE, and the law protects the rights of the payee on such grounds.
The UAE law is strict as far as check issuance is concerned, where there are compulsory details that need to feature for the check to be valid. Whoever commits fraud-sheering or intentionally incorrectly signing the check faces serious consequences of imprisonment or fines. In that respect, legal avenues do stand open to whoever will be injured by those actions and sue against the perpetrators for recovery of damages.