There are certain amendments to the Commercial Transactions Law relating to cheque provisions issued by the Federal Decree-Law (14) of 2020 (“the Law”).

For payment of a cheques value, the Law in the UAE does not require that the funds available with the drawee bank are equal to the value of the cheque.

In implementation of Article (6 17) of the Law, the bank should, where the fund for payment is less than the value of the cheque, partially pay the value of the cheque up to the available fund, unless the bearer rejects partial payment.

In this case, upon each partial payment, the bank shall initially at the back of the cheque confirming the partial payment and give back the original cheque to the bearer along with a certificate to that effect (as per the mechanism, which is currently being discussed with the banks and to be circulated soon).

In case of collection through the cheque holder/ beneficiary’s bank, the latter will issue the partial payment certificate to the cheque holder/beneficiary. The bank may keep a copy of the partially paid cheque and a copy of the partial payment certificate issued by it.

The bearer of the cheque shall have the right to demand the payment of the remaining amount against the original of the initial cheque, as per the Executive Regulations of the Civil Transactions Law, being considered an execution write, according to the provision of Article (635 bis) of the Law.

The bank, in accordance with Article ( 617) of the Law, shall report the details of the account holder to the Central Bank, in accordance with the mechanism to be circulated soon, in any of the following cases:

• Where no sufficient and usable finds for the payment for the value of cheque is available at its due date.
• Where the drawer, after issuing the cheque withdraw all the funds for payment so that it is not possible to pay its value.
• Where the bank partially pay’s the value of the cheque.

Therefore, cheque issuers are required to abide by the implementation mechanism of the amendments to the Law relating to the partial payment of the cheque to be circulated soon.

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Please note that this memo is for information purposes only and should not be construed as an advice. It does not necessarily cover every aspect of the
topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.

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