Understanding the situation
A cheque is commonly used in the UAE as a payment instrument and, in commercial practice, as a form of security for an obligation. When a cheque is presented and the bank does not pay it — for example because of insufficient funds, a closed account or a signature issue — the holder is left with a written instrument that records an amount and a drawer.
How that instrument can be relied on, and through which procedure, depends on the applicable legislation and court practice at the time, as well as on the facts: who signed, in what capacity, for what underlying transaction, and whether any part of the amount has since been paid.
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Possible options
Which of these is realistic — and in what order — depends on the amount, the drawer's position, the reason for non-payment and whether the underlying transaction is disputed.
- Direct contact with the drawer to agree payment or a schedule — often the quickest path where the relationship is still workable.
- A formal written demand or legal notice setting out the amount and a period for payment.
- A court-based process to obtain an enforceable decision, subject to the applicable procedure and evidence.
- A negotiated settlement agreement, which may be documented so that it can be relied on if payments stop.
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Practical steps
- 1Secure the original cheque and the bank's return memo; keep clear copies.
- 2Collect the documents behind the cheque: contract, invoices, delivery notes, account statements and correspondence.
- 3Record every payment or promise made after the return, with dates.
- 4Check whether the drawer is an individual or a company, and in which capacity the cheque was signed.
- 5Consider a written demand before escalating, unless there is a reason to act quickly.
- 6Obtain advice on the appropriate procedure before filing anything.
