Translated from Arabic.
The KSA Lawyers team explains that the Commercial Papers Law treats a cheque as a payment instrument payable on sight. Describing it as a guarantee cheque does not change its nature in the eyes of the bank, nor does it prevent it from being presented for payment.
Therefore, a cheque bounced for insufficient funds may expose the drawer to criminal liability, as the law criminalises issuing a cheque without sufficient funds. The "guarantee" description alone does not protect you from this liability.
A cheque is also an enforceable instrument under the Enforcement Law, so the payee may take it to the Enforcement Court to claim its value.
However, a written agreement that the cheque is a guarantee for a specific obligation is not without value. Since the payee is the party you contracted with directly, you may rely against it on defences arising from the underlying relationship between you, such as:
- That you have performed your obligations.
- That the amount claimed is not due, or is less than the value of the cheque.
The investigating authority and the court will consider the circumstances in which the cheque was issued and any evidence pointing to good or bad faith. If, however, the cheque has passed to another holder in good faith, these defences become much weaker.
Suggested practical steps:
1. Gather the contract and the clause stating that the cheque is a guarantee, together with evidence that you performed your obligations, such as delivery records, invoices and correspondence.
2. Follow up on the notice through Najiz or Absher, and appear before the Public Prosecution or the competent authority on the set date. Do not ignore any summons.
3. Submit a written defence explaining why the cheque was issued, showing that the payee presented it contrary to the agreement, and stating the value of the actual obligation, if any.
4. If the cheque is submitted for enforcement, seek advice on filing an enforcement dispute or a substantive claim before the competent court to establish that you owe nothing, or the true amount of the debt.
5. Consider an amicable settlement. Paying the correct amount or reaching a settlement may affect the course of the case in practice, although this is not guaranteed in every case.
For the future, it is better to avoid handing over cheques as a guarantee and to use instead a promissory note with defined terms, or a bank guarantee.
No particular outcome can be guaranteed, as the matter depends on the evidence and the judicial authority's assessment. We therefore recommend consulting a specialist lawyer to review the contract and documents before taking any action.