The term "negotiable instrument" as used in Law means bill of exchange, promissory note and cheque. In activities involving negotiable instruments, people shall comply with law, administrative rules and shall not jeopardize public interests. The following particulars shall be specified on a cheque: (1) the word expressing it to be a cheque; (2) an order of unconditional payment; (3) a sum certain in money; (4) name of the drawee; (5) the date of issue; and (6) the signature of the drawer. A cheque is null and void if any one of the particulars is not specified thereon and deeds in the form of cheque but not drawn from a bank shall not be considered as valid cheques. If the place of payment is not mentioned then the due payment shall be effected at the main domicile of the drawee.
The right on an issued cheque as used in Kuwaiti Law means the right of a holder to demand from the person liable for the payment of the sum payable by the cheque, including the right of claim for payment and the right of recourse. Similarly, liability on a cheque as used in this Law means the obligation of a debtor to pay the sum payable by the cheque to the holder of the cheque. Article 432 of Commercial law says that, the drawer of the cheque shall provide the drawee with the consideration for the payment thereof and the consideration for the payment is considered to be available to the drawee if a cheque is issued to him specifying a certain amount. As soon as a person submits the cheque the bank should pay the amount equivalent to what is mentioned in the cheque.
The cheque amount should be paid on the date of submission or before the date written on the cheque. There is time limit for presentment of a cheque for payment. The law makers do not leave enough time for the beneficiary of the cheque and a bearer shall present the cheque for payment within one month from the date of issuance of the cheque and if the person is outside Kuwait the time gap would be three months. However, the drawer who receives notice to stop payment of the lost instrument shall suspend its payment.
The bank cannot object to pay if the cheque complies with all other implications of the law. Only if the cheque is lost or the payor is bankrupt or if there is no money as balance then the question about the credibility of the cheque will arise. The sum specified on a cheque signed and issued by the drawer shall not exceed the actual balance of the drawer's deposit in the paying bank at the time of payment. Where the sum specified on a cheque signed and issued by the drawer exceeds the actual balance of the drawer's deposit in the paying bank at the time of payment, the cheque is of no value.
If the deposit in the bank is not sufficient enough to pay off the entire amount the bank will not pay any amount i.e., the bank will not try to lessen the burden of debt by paying the money which is remaining in the account. However, the drawer shall bear the liability for guaranteeing payment to a bearer the sum specified on the cheque signed and issued i.e., even if there is no cash balance in the account the bearer can produce it in the bank for encashment for a period of 6 years. When the balance of the drawer's deposit in the paying bank is sufficient to pay the sum of the cheque, the drawee will be paid in full on the day of presentment of cheque. However, if an interest is stipulated in the cheque it shall be treated as null.
© Arab Times 2009
