What Is the Penalty for Issuing a Cheque Without Funds in Egypt, and Can It Be Settled?

Many people ask us: “What is the penalty for a bounced cheque?”, “Can I settle a cheque case?”, “Can a cheque case be settled after judgment?”, “I gave a security cheque without sufficient funds — what do I do?” The answer: The Commercial Law No. 17 of 1999 (Article 534) punishes anyone who intentionally issues a cheque that has no existing and drawable funds with imprisonment and a fine not exceeding EGP 50,000, or either penalty; the victim or his special attorney may settle at any stage of the case, which extinguishes the criminal action.

What is the offence of issuing a cheque without funds?

It is an intentional offence under Article 534 of the Commercial Law, committed essentially by issuing a cheque for which there are no existing and drawable funds.

How is the offence committed?

By any of four acts committed intentionally: issuing a cheque without existing and drawable funds; withdrawing all or part of the funds after issuance so that the remainder does not cover the cheque; instructing the drawee bank not to pay outside the cases permitted by law; or drawing or signing the cheque in bad faith in a manner that prevents its payment. The same penalty applies to anyone who endorses a cheque by a transferring endorsement, or hands over a bearer cheque, knowing that it lacks full funds or is not drawable.

What should I do to avoid trouble?

Do not issue a cheque unless your account holds enough to cover it on the payment date, do not withdraw its funds after issuing it, do not instruct the bank to stop payment outside the cases the law permits, and do not hand over a blank cheque or agree to sign a security cheque without understanding its legal effect.

What are my rights if I am accused?

Do not sign anything, do not put your signature on any paper, and do not say a word except in the presence of your lawyer.

What is the penalty?

Imprisonment and a fine not exceeding EGP 50,000, or either penalty. If the offender commits one of these offences again within five years of a final conviction, the penalty is imprisonment and a fine not exceeding EGP 100,000. In addition, the court may order measures provided by law, such as publishing the judgment at the convicted person’s expense and, in case of repeat offending, withdrawing the cheque book.

Is the sentence subject to pardon, or must it be served in full?

There is no automatic pardon, but the law allows settlement: the victim or his special attorney may ask the Public Prosecution or the court, at any stage of the case, to record his settlement with the accused, which extinguishes the criminal action even if it was brought by direct action. If settlement occurs during execution of the sentence, the Public Prosecution orders its suspension even after the judgment has become final.

As the beneficiary, what do I do if the cheque bounces?

Keep the original cheque and whatever proves the bank’s refusal to pay, and consult a lawyer without delay, as there are legal deadlines and procedures that do not allow postponement. Note also that a beneficiary who accepts a cheque in bad faith, knowing it has no funds, may be punished by a fine not exceeding EGP 1,000.

Sources reviewed for the data in this article

A question you should know the answer to

Question: Does the law punish someone who instructs the bank not to pay a cheque?

Answer: Yes, if done intentionally and outside the cases permitted by law; it is one of the acts punishable under Article 534 of the Commercial Law.

What should I do if I cannot handle the situation and have fallen into trouble?

Keep our number with you or with a family member: +201208555806, and call us immediately so that we can intervene as quickly as possible to protect you.

If you are unsure whether your problem falls under cheque offences or another legal classification, and you want a legal opinion on it, you may consult a specialised lawyer.

If you are a party to a similar problem, do not face it alone; contact our firm or pay us a visit, so that we may place our experience at your service and handle your case with the care and precision it deserves.

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This article is general information for legal awareness and does not replace legal advice on your particular situation.