Are the Updates On Rental Contracts as The Bounced Cheque Has Been Decriminalize

Posted by Al Rowaad Advocates & Legal Consultants on March 2nd, 2022

The federal degree number 14 of 2020 has added new provisions to the law concerning cheque bounce matters and the said changes are now in force from January 2022 onwards. One of the significant changes that are being highly welcomed concerns the limited scope of criminalization in instances of returned cheques on account of insufficient funds. The instances in which criminality will still apply are the instances wherein bad faith exists on account of the issuer of the cheque or other specific criminal actions as included in the new changes.

Newly introduced changes:

• Partial Payment of Cheque: With the new amendments, partial payment has become mandatory. This applies if the amount available for payment is less than a given cheque’s value, then the drawee bank is now required to pay the amount partially. Further to the said, the beneficiary can then proceed to claim the remaining amount by initiating legal measures through the civil courts. The courts may issue an order against the issuer of the cheque to pay the entire cheque amount or the remaining balance due on the cheque.


• Narrowed Criminality: The new amendments bring in narrowed criminality in matters concerning cheques. Pursuant to the new changes, only the following actions will invite criminal action, such as:

  • Intentionally falsifying of cheques
  • Instances of fraud: This covers circumstances wherein the issuer instructs the respective bank, not the pay the cheque amount, pursuant to clause… the signature on the cheque would be considered as acknowledgment of the debt.
  • Providing counterfeit cheques
  • Withdrawing the account balance before the date of the cheque encashment in order to prevent the cheque from being cleared.

Postdated cheques have always been part of the very fabric of the UAE tenancy and leasing structure and continue to be so. With the newly introduced changes the landlords can now proceed with the following remedies in the instance a given tenant’s cheque bounces:

• Receive partial payment of the cheque value from the bank as a temporary measure; further
• File for execution steps directly and receive an order for either full payment of the cheque value or remaining amount (if partial payment has already been received). Article (635) Bis states that, “A cheque, which bears the drawee’s stamp as non-paid for the unavailable or insufficient fund, shall constitute an executive instrument as per the Executive Regulation of the Federal Law No. (11) of 1992, and its bearer shall have the right to demand the coercive enforcement, wholly or partially. With respect to its enforcement and dispute related to it, provisions, procedures and rules provided for in the said Executive Regulation should apply.”

The new changes also impose penalties on offenders that include, a penalty of no less than 10% of the cheque value, subject to the minimum of AED 1,000, and no more than the cheque value. The penalty shall be double in case of repetition (ref : Article (641) Bis (1)). Further, an order of withdrawal of existing cheque book from a person convicted of breaching this law and also to prevent such convicted defendant from obtaining any further cheque books for up to five years can also be imposed (ref: Article (643)).

Grasping from the above points, it can be seen that the new changes have been affected to strengthen the rights of both the cheque drawer and drawee and also to ensure that a cheque collection process is made more effective. More expedited processes and safer changes are now in place with the new changes which transcend to fairer commercial practices at both individual and institutional levels.

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Al Rowaad Advocates & Legal Consultants

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Al Rowaad Advocates & Legal Consultants
Joined: February 3rd, 2021
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