Dud Cheque

The practical significance for a Nigerian payee is leverage.

A supplier holding a bounced cheque has both a civil claim for the debt and a potential criminal complaint. That combination changes the conversation, and a great many dud cheque matters resolve on payment once the drawer understands the position.

The steps for a payee are straightforward.

Present the cheque within the period, because a cheque presented late falls outside the Act.

Obtain the bank's advice of dishonour showing the reason. That document is the evidence, and the reason stated on it is what matters. Refer to drawer, insufficient funds and words to that effect are the relevant ones.

Write to the drawer demanding payment and stating that the cheque was dishonoured, keeping proof of delivery.

Where payment does not follow, the civil claim proceeds, and a complaint can be made to the police or the Economic and Financial Crimes Commission depending on the circumstances.

For a drawer, the practical protection is simply not to issue post dated cheques against money you expect rather than money you hold.

Post dated cheques are the practical source of most dud cheque exposure.

Nigerian commercial practice uses them heavily as security and as a payment promise. A borrower issues cheques for future instalments. A buyer issues a post dated cheque against expected receipts. A tenant issues cheques for a year of rent. In each case the drawer is writing a cheque against money they do not yet have.

That is a criminal risk if the money does not arrive, and drawers frequently do not appreciate it.

For a payee, the three month presentation rule is the trap. A cheque held for six months and then presented falls outside the Act, and the payee has lost the criminal route entirely and holds only a civil claim.

The two routes also serve different purposes. The criminal complaint punishes; it does not put money in your hand. The civil claim recovers the debt. A payee who wants payment should pursue the civil route and use the criminal exposure as context rather than as a substitute.

That point deserves emphasis because of the surrounding problem. Using the police to recover a civil debt is unlawful, and Nigerian courts have awarded damages for it. A genuine dud cheque complaint is different from that, because there is an actual offence, but a payee should be careful that what they are pursuing is the offence rather than the debt.

Three ways a payment fails, with very different consequences for the payer.

An unpaid invoice is a civil matter. The debt is owed, the creditor demands payment, and if it is not made they sue. There is no criminal element in simply not paying.

A dud cheque adds a statutory offence where the elements are met: a cheque issued for valuable consideration, presented within three months, dishonoured for insufficient funds. The debt is still owed and the criminal exposure sits alongside it.

Fraud requires dishonest intent to obtain something by deception. It is harder to prove, carries the criminal standard, and it is a different offence entirely.

A payee should identify which they actually have. Most bounced cheques are the second rather than the third, and pursuing the wrong one wastes time and can expose the payee to a claim of their own.

The three month presentation rule is strict, and a payee who held the cheque loses the statutory route.

The offence also depends on valuable consideration, so a cheque given as a gift, or one issued in circumstances the Act does not cover, may fall outside it.

A criminal complaint does not recover the money. Conviction punishes the drawer; the debt is recovered through the civil claim.

Cheque use is also declining as electronic transfers dominate, so the practical scope of the Act is narrower than it once was.

And the line between a genuine complaint and using criminal process for debt recovery is one payees should watch, because crossing it exposes them to a fundamental rights claim.