01
Legal Notice
Sending a legal notice to the drawer, demanding payment within a stipulated time, is the first step in resolving the issue amicably.
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A cheque bounce occurs when a cheque presented for payment is returned by the bank unpaid due to various reasons, such as insufficient funds, signature mismatch, or post-dated cheques. This can be a distressing experience for both parties involved, leading to financial strain and potential legal consequences.
Initiating Legal Action
When a cheque bounces, the payee has the option to take legal action against the drawer. The following steps can be taken:
02
Filing a Complaint
If the drawer fails to respond or make the payment, the payee can file a formal complaint with the appropriate court or authority.
03
Appearing in Court
Both parties will be required to appear in court for hearings and present their arguments and evidence.
Defenses against Cheque Bounce
The drawer can present certain defenses to avoid liability for a cheque bounce:
Insufficient Funds
The drawer can claim that there were insufficient funds in the account at the time of issuing the cheque.
Signature Mismatch
If the drawer’s signature on the cheque does not match the bank records, it can be used as a defense.
Post-Dated Cheques
If the cheque was post-dated and presented before the due date, the drawer may not be liable.
Frequently Asked Question
Yes, both parties can choose to settle the matter outside of court through a mutual settlement agreement.
The duration can vary depending on the complexity of the case and the legal procedures involved. It may take several months to a few years for resolution.
In some jurisdictions, a cheque bounce can be treated as a criminal offense if specific conditions are met, leading to potential imprisonment.
Yes, a post-dated cheque can bounce if it is presented for payment before the agreed-upon date.
Yes, a cheque bounce can negatively impact your credit score, making it difficult to obtain credit from financial institutions in the future.