Time: June 18, 2019
As we all know, the law deals strictly with anyone who writes a check without having sufficient funds in their bank account to cover it. As the economy prospers, with an increasing number of entrepreneurs and startups joining the business world, now is a good time to discuss this issue.
According to Ministry of Justice figures, there were about 18,700 cases last year of enforcement proceedings related to bounced checks, mainly because of insufficient funds. This suggests that the issue is so widespread that the authorities must deal with it more rigorously.
First, let us define our terms. A check is a cash instrument for payment or commercial trading, and not for the purpose of credit. The person who issues a check is called the drawer, who instructs the drawee (one of the banks) to allow a designated beneficiary appointed by the drawer to collect a specified sum from the drawer’s bank account.
Banks may dishonor a check, refusing to cash it, for several reasons; there may be insufficient funds in the drawer’s account, the signature on the check may not match the signature the bank has on record for the drawer, or there may be an error with the date.
These circumstances can, of course, happen accidentally, in which case no crime has been committed. There must be criminal intent. For example, if a drawer issues a check while having insufficient funds, but makes it clear to the beneficiary that the required funds will be deposited later and specifies when this will happen, then there is no evidence of bad faith.
However, writing a bad check may be intentional. People have been known to write a check while having sufficient funds to cover it, but then withdraw the funds before the check is deposited; to issue a check and instruct their bank not to cash it; or even deliberately sign a check incorrectly, knowing that their bank will not honor it.
Anyone convicted of doing so is liable to be imprisoned for up to three years and/or fined up to SR50,000. If the offense is repeated within three years, the maximum period of imprisonment increases to five years and the maximum fine to SR100,000. The law also authorizes publication of offenders’ names, provided the text of the judgment specifies how this may occur.
So what should you do if someone gives you a check that bounces? First, obtain the check from your bank, along with a letter of objection from the bank. You can then file a complaint at the police department in the relevant bank branch’s area, and from there you can apply to the Enforcement Court for the implementation of your rights.
Of course, cash flow can be an issue for companies, especially entrepreneurial startups, and mistakes happen — but company managers must be equipped with all the relevant information about tradable instruments, and be aware of the risks. The media also has a role in educating society about the gravity of dishonored checks, and their negative long-term effect on the economy.
• Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif