Bounced Or Dud Cheque And Its Legal Consequence In Nigeria

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A cheque is not money until it is presented to a bank and paid to the payee by the bank. When a properly issued cheque is presented before a bank, the bank is obliged to pay the payee according to the mandate of the customer (drawer). But the bank’s obligation can only exist when and where the customer (drawer) has sufficient amount in his account to cover the proposed sum. Where the drawer has no sufficient money in his account but has an understanding with the bank and has been granted credits or over-draft by the bank,  his cheque offering more than he has in his account will be accepted and honoured by the bank. Therefore with sufficient funds in a customer’s account the bank is under an “obligato civilic” (obligation to serve) to honour his cheque and pay the payee so far as there is no legal impediments. Albeit, the said cheque must be regular; it must satisfy all necessary requirements as to date, amount, drawers signature, payees name and timely presented to the concerned bank. A fundamental error in the above required information may cause a dishonour and return of cheque; such is a rightful dishonour of cheque.   

A bank’s obligation to honour and pay a validly drawn cheque can be legally revoked by a “Notice of Debt”, “Bankruptcy” or “Mental Incapacitation” of the customer and irregularity in a customer’s mandate and authorities relating to his account. Where there is a regularly and validly drawn cheque with sufficient fund, the banks will still refuse the honour of the cheque on the COUNTERMAND ORDER OF PAYMENT of the drawer of the cheque. Note that the countermand order must come before the presentment and payment of a concerned cheque else it would be useless and not binding on the bank. Where a countermand order comes on time the bank is precluded from paying the cheque, if it acts otherwise, the liability of such payment lies wholly on her. The courts will not hesitate to give justice to the customer, since the bank acted contrary to its principal/master’s instructions.  With our technological advancement, banks often confirm through phones or emails before paying cheques and countermands orders can equally be sent to banks through same means.

Note that a customer must draw his cheques with reasonable care and in a way not facilitate forgery since a banker can reject the cheque on the grounds of forgery. A bank that accepts and pays out forged cheque is liable to the last coin of the payment; let bank workers be guided.

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